A new haptic illusion is described, in which the location of the mobile object affects the perception of its rigidity. There is theoretical and experimental support to the notion that limb position sense results from the brain combining ongoing sensory information with expectations arising from prior experience. How does this probabilistic state information affect one’s tactile perception of the environment mechanics? In a simple estimation process human subjects were asked to report the relative rigidity of two simulated virtual objects. One of the objects remained fixed in space and had various coefficients of stiffness. The other virtual object had constant stiffness but moved with respect to the subjects. Earlier work suggested that the perception of an object’s rigidity is consistent with a process of regression between the contact force and the perceived amount of penetration inside the object’s boundary. The amount of penetration perceived by the subject was affected by varying the position of the object. This, in turn, had a predictable effect on the perceived rigidity of the contact. Subjects’ reports on the relative rigidity of the object are best accounted for by a probabilistic model in which the perceived boundary of the object is estimated based on its current location and on its past observations. Therefore, the perception of contact rigidity is accounted for by a stochastic process of state estimation underlying proprioceptive localization of the hand.