Animals in the lower mesopelagic zone (600-1,000 m depth) of the oceans have converged on two major strategies for camouflage: transparency and red or black pigmentation [1]. Transparency conveys excellent camouflage under ambient light conditions, greatly reducing the conspicuousness of the animal's silhouette [1, 2]. Transparent tissues are seldom perfectly so, resulting in unavoidable internal light scattering [2]. Under directed light, such as that emitted from photophores thought to function as searchlights [3-8], the scattered light returning to a viewer will be brighter than the background, rendering the animal conspicuous [2, 4]. At depths where bioluminescence becomes the dominant source of light, most animals are pigmented red or black, thereby reflecting little light at wavelengths generally associated with photophore emissions and visual sensitivities [3, 9-14]. However, pigmented animals are susceptible to being detected via their silhouettes [5, 9-11]. Here we show evidence for rapid switching between transparency and pigmentation under changing optical conditions in two mesopelagic cephalopods, Japetella heathi and Onychoteuthis banksii. Reflectance measurements of Japetella show that transparent tissue reflects twice as much light as pigmented tissue under direct light. This is consistent with a dynamic strategy to optimize camouflage under ambient and searchlight conditions.