Newer neuroimaging technology has moved beyond pure anatomical imaging and ventured into functional and physiological imaging. Perfusion magnetic resonance imaging (PWI), which depicts hemodynamic conditions of the brain at the microvascular level, has an increasingly important role in clinical central nervous system applications. This review provides an overview of the established role of PWI in brain tumor and cerebrovascular imaging, as well as some emerging applications in neuroimaging. PWI allows better characterization of brain tumors, grading, and monitoring. In acute stroke imaging, PWI is utilized to distinguish penumbra from infarcted tissue. PWI is a promising tool in the assessment of neurodegenerative and neuropsychiatric diseases, although its clinical role is not yet defined.