Formalin-fixed brain slices from four cases of subcortical arteriosclerotic encephalopathy in which a firm diagnosis could be made both clinically and pathologically have been studied by magnetic resonance imaging (MRI). The slices were subsequently embedded in paraffin-wax or celloidin and sections were cut in the same plane as the MRI slices. There was a good correlation between the extent and severity of the abnormal MRI signal and the pathological changes. Areas of diffuse MRI abnormality corresponded with areas of axonal and myelin loss with gliosis, and small "lacune"-like lesions corresponded with lacunar infarcts histologically. Sparing of the subcortical U-fibres was seen histologically and on MRI. The abnormal signal probably originates from increased tissue water attributable to gliosis and an expanded extracellular space.