How we see the world is not simply the result of light falling onto our retinas, but critically shaped by attention (what is relevant) and as a growing body of work indicates, predictions grounded in past experience (what is likely). Overturning the classical notion of perception as a largely stimulus-driven process, the idea that our brain is a prediction machine, continually trying to predict what is likely ‘out there’ based on past experience, is quickly growing in stature and influence. Yet, little is still known about how predictions shape perceptual experience. Moreover, it is completely unknown to what extent predictive processing occurs automatically. Lastly, how the brain ultimately ‘decides’ on one hypothesis or interpretation of the current sensory state is still unclear. This project addressed these outstanding questions with the ultimate aim to better understand how the brain infers the world and the mechanisms that give rise to perceptual experience. To this end, it used an integrated application of psychophysical, neuroimaging, brain stimulation, mathematical modelling, and pharmacological techniques. The research program comprised three subprojects. The first subproject examined how expectations are implemented in the brain and shape stimulus processing, independently from and aided by attention. The second subproject investigates if one can teach oneself to be free of expectation and associated habitual responding through intensive mental training, as cultivated by meditation. The third subproject tested the idea that the striatum, a subcortical brain region, and its irrigation by the neurotransmitter dopamine play a critical role in updating our internal model about the environment and thereby conscious perception. Findings shed novel light on the mechanisms that underlie experience and the extent to which these mechanisms are plastic, with important implications for the study of clinical disorders characterized by dysfunctional experience of the world.