Functional magnetic resonance imaging (fMRI) is an emerging methodology which provides various approaches to visualizing regional brain activity non-invasively. Although the exact mechanisms underlying the coupling between neural function and fMRI signal changes remain unclear, fMRI studies have been successful in confirming task-specific activation in a variety of brain regions, providing converging evidence for functional localization. In particular, fMRI methods based on blood oxygenation level dependent (BOLD) contrast and arterial spin labeling (ASL) perfusion contrast have enabled imaging of changes in blood oxygenation and cerebral blood flow (CBF). While BOLD contrast has been widely used as the surrogate marker for neural activation and can provide reliable information on the neuroanatomy underlying transient sensorimotor and cognitive functions, recent evidence suggests perfusion contrast is suitable for studying relatively long term effects on CBF both at rest or during activation. New developments in combining or simultaneously measuring the electrophysiological and fMRI signals allow a new class of studies that capitalize on dynamic imaging with high spatiotemporal resolution. This article reviews the biophysical bases and methodologies of fMRI and its applications to the clinical neurosciences, with emphasis on the spatiotemporal resolution of fMRI and its coupling with neurophysiology under both normal and pathophysiological conditions.