Functional magnetic resonance imaging (fMRI) represents a useful tool for studying brain functions and the neural basis of cognition in healthy children and in those in disease states. Functional magnetic resonance imaging is a relatively new use of existing magnetic resonance imaging technology that allows scientists and practitioners to observe the brain at work. It is based on the observation that local increases in blood flow are related to neural activity. This review considers principles of functional magnetic resonance imaging, issues relevant to imaging children, and research using functional magnetic resonance imaging to examine cognitive processing in pediatric populations. The focus is specifically on language studies to review strengths, limitations, and practical applications of this technology with children. Future directions for functional magnetic resonance imaging are presented.