Illusion, namely a mismatch between the objective and perceived properties of an object present in the environment, is a common feature of visual perception, both in normal and pathological conditions. This makes illusion a valuable tool with which to explore normal perception and its impairments. Although still debated, the hypothesis of a modified, and typically diminished, susceptibility to illusions in schizophrenia patients is supported by a growing number of studies. The current paper aimed to review how illusions have been used to explore and reveal the core features of visual perception in schizophrenia from a psychophysical, neurophysiological and functional point of view. We propose an integration of these findings into a common hierarchical Bayesian inference framework. The Bayesian formalism considers perception as the optimal combination between sensory evidence and prior knowledge, thereby highlighting the interweaving of perceptions and beliefs. Notably, it offers a holistic and convincing explanation for the perceptual changes observed in schizophrenia that might be ideally tested using illusory paradigms, as well as potential paths to explore neural mechanisms. Implications for psychopathology (in terms of positive symptoms, subjective experience or behavior disruptions) are critically discussed.