The auditory "octave illusion" arises when dichotic tones, presented one octave apart, alternate rapidly between the ears. This study aimed to explore the link between the perception of illusory pitches and brain activity during presentation of dichotic tones. We conducted a behavioral study of how participants perceived binaural dichotic tones of octave illusions and classified them, based on the reported percepts, in an illusion (ILL) group, without an illusion (non-ILL) group, and others. We recorded brain activity using functional magnetic resonance imaging and analyzed the activation due to dichotic illusion tones. The activation in the bilateral planum polare in the auditory cortex was significantly larger in the ILL group than in the non-ILL group. In the right premotor cortex, the non-ILL group showed a significantly larger activation than did the ILL group, suggesting that the sensation of the meter to the stimulus sound was significant in the non-ILL but not in the ILL group. The results indicated that the activity in these areas was related to the occurrence of octave illusions. The nonsignificant sensation of the meter to the stimulus sound in the ILL group may be consistent with the perception of octave illusion.