Many of the regions with the earliest atrophy in Alzheimer's Disease (AD) do not show prominent deficits on functional imaging studies of flow or metabolism. This paradox may provide unique insights into the pathophysiology of AD. We sought to examine the relationship between function and atrophy in AD using MRI blood flow and anatomic imaging. 22 subjects diagnosed with AD, mean Mini Mental State Exam (MMSE) score 22.2, and 16 healthy elderly controls were imaged with a volumetric arterial spin labeling blood flow MRI technique and an anatomical imaging method using the identical spatial resolution, image orientation, and spatial encoding strategy. Cerebral blood flow (CBF) and gray matter (GM) maps derived from the imaging were transformed to a standard anatomical space. GM and CBF maps were tested for significant differences between groups. Additionally, images were tested for regions with significant mismatch of the CBF and GM differences between groups. CBF was significantly lower in the bilateral precuneus, parietal association cortex and the left inferior temporal lobe but was non-significantly increased in the hippocampus and other medial temporal structures. After correction for GM loss, CBF was significantly elevated in the hippocampus and other medial temporal structures. The hippocampus and other regions affected early in AD are characterized by elevated atrophy-corrected perfusion per cm(3) of tissue. This suggests compensatory or pathological elevation of neural activity, inflammation, or elevated production of vasodilators.