Modern drug development requires technologies that allow rapid translation from the preclinical to the clinical stage. It is obvious that non-invasive imaging modalities such as magnetic resonance imaging (MRI) will play a central role in this regard. This article reviews the use of structural and functional MRI readouts for characterization of central nervous system (CNS) disorders and evaluation of the efficacy of potential CNS drugs. Examples comprise dementia of Alzheimer's type, cerebral ischemia, and neuroinflammation covering both clinical and preclinical aspects. In these examples MRI has been used to obtain relevant structural information on brain atrophy, on the location and extent of ischemic brain areas, and on the number and distribution of demyelinated plaques. These structural data are complemented by readouts assessing the functional consequences associated with the pathomorphological changes. In the last decade, MRI has evolved into a standard tool for the development of CNS drugs. With regard to target-specific/molecular imaging applications MRI is limited by its inherently low sensitivity; complementary imaging modalities utilizing optical and radionuclear reporter systems will thus be required.