A new functional MRI protocol that integrates variable echo time (TE) acquisition and a block-design paradigm is proposed and evaluated with finger-tapping motor task. Simulations and experimental data show that the blood oxygenation level-dependent (BOLD) sensitivity achieved with this approach is comparable to that achieved using a conventional constant-TE protocol. The proposed variable-TE fMRI protocol provides valuable information that cannot be obtained with the constant-TE protocol. First, a field inhomogeneity map can be derived from the multi-TE data and used to correct EPI geometric distortions. Second, changes of T2* values due to the BOLD effect can be quantified. Third, for brain regions with pronounced susceptibility field gradients, the reduced BOLD sensitivity may be compensated for when the acquired multi-TE data are processed appropriately (e.g., with weighted summation). Fourth, large venules and veins may possibly be identified (depending on the vessel orientation and volume fraction) by evaluating the phase values of the multi-TE data. Finally, magnetic field drift over time can be measured from dynamic field maps available with this protocol.