Functional magnetic resonance imaging (MRI) is a noninvasive, highly repeatable, and increasingly available method to study disordered brain activity among patients with psychological or neurological disorders. In this chapter the biophysical principles underlying functional MRI are presented, and methodological limitations of the method are discussed. Artifacts related to the biophysical basis of the functional MRI signal or associated with image acquisition methods are presented, as are artifacts related to baseline effects-especially those associated with medication, caffeine, and nicotine use. The difficulties associated with the comparison of groups of subjects differing in performance receive special attention. The limitations of cognitive subtraction designs for functional MRI are also discussed. Functional MRI studies of schizophrenia patients are used to illustrate these points.