Behavioral studies indicate deficits in phonological working memory (WM) and executive functioning in dyslexics. However, little is known about the underlying functional neuroanatomy. In the present study, neural correlates of WM in adolescents and young adults with dyslexia were investigated using event-related functional magnetic resonance imaging (fMRI) and a parametric verbal WM task which required the manipulation of verbal material. Dyslexics were not significantly slower than controls; however, they were less accurate with the highest WM demand. The functional analysis excluded incorrectly performed and omitted trials, thus controlling for potential activation confounds. Compared with control subjects, both increased and decreased activation of the prefrontal cortex were found in the dyslexic group. Dyslexics showed significantly more activation than controls with increasing WM demand in the left superior frontal gyrus (BA 8), as well as in the inferior frontal gyrus including Broca's area (BA 44) and its right homologue. Less activation was found in the middle frontal gyrus (BA 6) and in the superior parietal cortex (BA 7). A positive correlation between activation of prefrontal regions and verbal WM performance (as measured by digit span backwards) was found only in the dyslexic group. Accuracy deficits at the highest cognitive demand during the verbal WM task and the digit span backwards suggest that manipulation rather than maintenance is selectively impaired in dyslexics. The fMRI data provide further evidence for functional differences in cortical regions associated with language processing and executive function in subjects with dyslexia.