Functional MRI (fMRI), a tool increasingly used to study cognitive function, is also an important tool for understanding not only normal development in healthy children, but also abnormal development, as seen in children with epilepsy, attention-deficit/hyperactivity disorder, and autism. Since its inception almost 15 years ago, fMRI has seen an explosion in its use and applications in the adult literature. However, only recently has it found a home in pediatric neurology. New adaptations in study design and technologic advances, especially the study of resting state functional connectivity as well as the use of passive task design in sedated children, have increased the utility of functional imaging in pediatrics to help us gain understanding into the developing brain at work. This article reviews the background of fMRI in pediatrics and highlights the most recent literature and clinical applications.