Perception is a process of inference, integrating sensory inputs with prior expectations. However, little is known regarding the temporal dynamics of this integration. It has been proposed that expectation plays a role early in the perceptual process, by biasing early sensory processing. Alternatively, others suggest that expectations are integrated only at later, post-perceptual decision-making stages. The current study aimed to dissociate between these hypotheses. We exposed male and female human participants (N=24) to auditory cues predicting the likely direction of upcoming noisy moving dot patterns, while recording millisecond-resolved neural activity using magnetoencephalography (MEG). First, we found that participants’ reports of the moving dot directions were biased towards the direction predicted by the auditory cues. To investigate when expectations affected sensory representations, we used inverted encoding models to decode the direction represented in early sensory signals. Strikingly, the auditory cues modulated the direction represented in the MEG signal as early as 150ms after visual stimulus onset. This early neural modulation was related to perceptual effects of expectation: participants with a stronger perceptual bias towards the predicted direction also revealed a stronger reflection of the predicted direction in the MEG signal. For participants with this perceptual bias, a trial-by-trial correlation between decoded and perceived direction already emerged prior to visual stimulus onset (∼-150ms), suggesting that the pre-stimulus state of the visual cortex influences sensory processing. Together, these results suggest that prior expectations can influence perception by biasing early sensory processing, making expectation a fundamental component of the neural computations underlying perception.Significance statementPerception can be thought of as an inferential process in which our brains integrate sensory inputs with prior expectations to make sense of the world. This study investigated whether this integration occurs early or late in the process of perception. We exposed human participants to auditory cues which predicted the likely direction of visual moving dots, while recording neural activity with millisecond resolution using magnetoencephalography (MEG). Participants’ perceptual reports of the direction of the moving dots were biased towards the predicted direction. Additionally, the predicted direction modulated the neural representation of the moving dots just 150 ms after they appeared. This suggests that prior expectations affected sensory processing at very early stages, playing an integral role in the perceptual process.