Near-infrared spectroscopy is a non-invasive optical method used to detect functional activation of the cerebral cortex. Cognitive, visual, auditory and motor tasks are among the functions that have been investigated by this technique in the context of optical brain computer interfacing. In order to determine whether the optical response is due to a stimulus, it is essential to identify and reduce the effects of physiological noise. This paper characterizes noise typically present in optical responses and reports signal processing approaches used to overcome such noise.