In interocular suppression, a suprathreshold monocular target can be rendered invisible by a salient competitor stimulus presented in the other eye. Despite decades of research on interocular suppression and related phenomena (e.g., binocular rivalry, flash suppression, continuous flash suppression), the neural processing underlying interocular suppression is still unknown. We developed and tested a computational model of interocular suppression. The model included two processes that contributed to the strength of interocular suppression: divisive normalization and attentional modulation. According to the model, the salient competitor induced a stimulus-driven attentional modulation selective for the location and orientation of the competitor, thereby increasing the gain of neural responses to the competitor and reducing the gain of neural responses to the target. Additional suppression was induced by divisive normalization in the model, similar to other forms of visual masking. To test the model, we conducted psychophysics experiments in which both the size and the eye-of-origin of the competitor were manipulated. For small and medium competitors, behavioral performance was consonant with a change in the response gain of neurons that responded to the target. But large competitors induced a contrast-gain change, even when the competitor was split between the two eyes. The model correctly predicted these results and outperformed an alternative model in which the attentional modulation was eye specific. We conclude that both stimulus-driven attention (selective for location and feature) and divisive normalization contribute to interocular suppression. 