Psychophysical and neurophysiological studies of responses to visual motion have converged on a consistent set of general principles that characterize visual processing of motion information. Both types of approaches have shown that the direction and speed of target motion are among the most important encoded stimulus properties, revealing many parallels between psychophysical and physiological responses to motion. Motivated by these parallels, this review focuses largely on more direct links between the key feature of the neuronal response to motion, direction selectivity, and its utilization in memory-guided perceptual decisions. These links were established during neuronal recordings in monkeys performing direction discriminations, but also by examining perceptual effects of widespread elimination of cortical direction selectivity produced by motion deprivation during development. Other approaches, such as microstimulation and lesions, have documented the importance of direction-selective activity in the areas that are active during memory-guided direction comparisons, area MT and the prefrontal cortex, revealing their likely interactions during behavioral tasks.