A model of orientation-specific long-range connections was proposed in which local connections generate cortical gain control and provide the substrate for dynamic modulations by long-range inputs. This model accounted for the rapid stimulus-dependent modulation of activity mediated by horizontal connections in visual cortex demonstrated in our optical recordings and in prior data. This work suggests a dynamic role for the extraclassical receptive field as either facilitatory or suppressive, depending on the level of excitation from the classical receptive field. Thus the model provides a concise and consistent explanation for disparate sets of physiological data which suggest both orientation-specific suppression and facilitation from outside the classical receptive field. In addition to physiological evidence [10,18,24,25] there is psychophysical evidence for long-range facilitation and suppression [8,32]. Our model and data argue strongly that the response to a stimulus even in V1 depends importantly on the net driving from iso-orientation stimuli at distant locations in the visual field. The biphasic nature of the context-dependent gain control we propose would allow the same circuitry to contribute both to facilitatory visual functions such as perceptual ``filling in'' and to putative suppressive functions such as figure-ground discrimination, perceptual ``pop-out'', and texture segregation.