Important questions relating to the coupling of local neuronal activity to the hemodynamic response measured using functional magnetic resonance imaging (fMRI), as well as issues concerning imaging sequence, paradigm design and data analysis processing, have been addressed during the past year. Initial fMRI studies identified visual, somatosensory, auditory and motor activation areas in the primary cortices. Current 'second generation' studies aim to identify changes in the fMRI signal associated with specific tasks and stimulus parameters. Dynamic aspects of brain processing for performing higher order cognitive functions, such as language, attention, mental imagery, and learning and memory, have also been explored.