From your screenshot, I'd expect the bkg color to be gray not white. In any case, if you make your UC transaprent, then also set its Windowless property to true. Then transparency should be shown throughout. If that is not an acceptable solution, you can try compiling the AIC to a separate OCX and see if the issue continues. Or try different combinations of your usercontrol. Changing any combination in the AIC will fail to produce the desired effect.

Bottom line, the AIC gets its hDC, that it draw on, from VB. If VB gives it a solid fill background, that's what is drawn on.