FACT is an interactive paper system for fine-grained interaction with documents across the boundary between paper and computers. It consists of a small camera-projector unit, a laptop, and ordinary paper documents. With the camera-projector unit pointing to a paper document, the system allows a user to issue pen gestures on the paper document for selecting fine-grained content and applying various digital functions. For example, the user can choose individual words, symbols, figures, and arbitrary regions for keyword search, copy and paste, web search, and remote sharing. FACT thus enables a computer-like user experience on paper. This paper interaction can be integrated with laptop interaction for cross-media manipulations on multiple documents and views. We present the infrastructure, supporting techniques and interaction design, and demonstrate the feasibility via a quantitative experiment. We also propose applications such as document manipulation, map navigation and remote collaboration.