Functional magnetic resonance imaging is sensitive to signal fluctuations due to physiological motion and system instability. In this paper, motion-related signal fluctuations are studied, and a method that uses navigator echoes to monitor and compensate for signal fluctuations in a gradient-echo sequence is described. The technique acquires a "navigator" signal before the application of the phase-encoding and readout gradients and corrects the phase of the subsequently acquired imaging data. This technique was implemented on a 4 Tesla whole body system and validated on normal volunteers. With this technique, temporal fluctuations in image intensity were substantially reduced and improved functional activation maps were obtained.