Visual motion is an ethologically important stimulus throughout the animal kingdom. In primates, motion perception relies on specific higher-order cortical regions. Although mouse primary visual cortex (V1) and higher-order visual areas show direction-selective (DS) responses, their role in motion perception remains unknown. Here, we tested whether V1 is involved in motion perception in mice. We developed a head-fixed discrimination task in which mice must report their perceived direction of motion from random dot kinematograms (RDKs). After training, mice made around 90% correct choices for stimuli with high coherence and performed significantly above chance for 16% coherent RDKs. Accuracy increased with both stimulus duration and visual field coverage of the stimulus, suggesting that mice in this task integrate motion information in time and space. Retinal recordings showed that thalamically projecting On-Off DS ganglion cells display DS responses when stimulated with RDKs. Two-photon calcium imaging revealed that neurons in layer (L) 2/3 of V1 display strong DS tuning in response to this stimulus. Thus, RDKs engage motion-sensitive retinal circuits as well as downstream visual cortical areas. Contralateral V1 activity played a key role in this motion direction discrimination task because its reversible inactivation with muscimol led to a significant reduction in performance. Neurometric-psychometric comparisons showed that an ideal observer could solve the task with the information encoded in DS L2/3 neurons. Motion discrimination of RDKs presents a powerful behavioral tool for dissecting the role of retino-forebrain circuits in motion processing.