Binocular disparity provides metric depth information, while monocular cues like occlusion offer depth order. In augmented reality (AR), conflicts between these cues can occur when virtual objects fail to be occluded by real-world surfaces, creating a depth cue conflict and subsequently impacting depth perception. The integration of occlusion and binocular disparity was investigated under this cue conflict in AR using distance-matching paradigms. These paradigms were applied within reach space (0.35–0.5 m) and beyond reach space (0.9–1.5 m). Observers matched the distance of a virtual letter ’A,’ superimposed on a physical surface, using a virtual probe. In addition to the probe, manual reach responses were also made with the index finger for the within reach space condition. Results revealed consistent underestimation of the letter’s distance when it was rendered beyond the surface, with errors proportional to distance. These biases persisted even when proprioceptive information was available, highlighting the robust influence of occlusion cue conflicts on perceived depth. Thus, designers must carefully plan and position virtual augmentations to avoid such errors and their impact on user interaction.

Virtual reality (VR) often induces perceptual distortions, for instance, underestimates of perceived distance which may distort perceived size. However, other depth cues are available in these immersive environments that may help users perceive size accurately. Here, we examined how binocular and monocular depth cues, as well as object interaction, influenced the perceived size of 3D shapes in VR. The results showed that binocular cues play an essential role in size judgements, whereas dynamic monocular cues, such as motion parallax, did not fully compensate for their absence, underscoring the importance of rendering high-quality binocular cues for fine size discrimination tasks in virtual environments.