The lateral occipital cortex (LOC) activates selectively to images of intact objects versus scrambled controls, is selective for the figure-ground relationship of a scene, and exhibits at least some degree of invariance for size and position. Because of these attributes, it is considered to be a crucial part of the object recognition pathway. Here we show that human LOC is critically involved in perceptual decisions about object shape. High-density EEG was recorded while subjects performed a threshold-level shape discrimination task on texture-defined figures segmented by either phase or orientation cues. The appearance or disappearance of a figure region from a uniform background generated robust visual evoked potentials throughout retinotopic cortex as determined by inverse modeling of the scalp voltage distribution. Contrasting responses from trials containing shape changes that were correctly detected (hits) with trials in which no change occurred (correct rejects) revealed stimulus-locked, target-selective activity in the occipital visual areas LOC and V4 preceding the subject’s response. Activity that was locked to the subjects’ reaction time was present in the LOC. Response-locked activity in the LOC was determined to be related to shape discrimination for several reasons: shape-selective responses were silenced when subjects viewed identical stimuli but their attention was directed away from the shapes to a demanding letter discrimination task; shape-selectivity was present across four different stimulus configurations used to define the figure; LOC responses correlated with participants’ reaction times. These results indicate that decision-related activity is present in the LOC when subjects are engaged in threshold-level shape discriminations.