Currently, a paradigm shift towards expanded early use of cranial MRI in newborns at risk and infants in the first year of life can be observed in neonatology. Beyond clinical MRI applications, there is progressive use of functional MRI (fMRI) in this age group. On the one hand, fMRI allows monitoring of functional developmental processes depending on maturational stage; on the other hand, this technique may provide the basis for early detection of pathophysiological processes as a prerequisite for functionally guided therapeutic interventions. This article provides a comprehensive review of current fMRI applications in neonates and infants during the first year of life and focuses on the associated methodological issues (e. g. signal physiology, sedation, safety aspects).