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The principles of cerebral perfusion imaging by the method of dynamic susceptibility contrast magnetic resonance imaging (DSC-MRI) (bolus tracking) are described. The MRI signals underlying DSC-MRI are discussed. Tracer kinetics procedures are defined to calculate images of cerebral blood volume (CBV), cerebral blood flow (CBF), and mean transit time (MTT). Two general categories of numerical procedures are reviewed for deriving CBF from the residue function. Procedures that involve deconvolution, such as Fourier deconvolution or singular value decomposition (SVD), are classified as model-independent methods because they do not require a model of the microvascular hemodynamics. Those methods in principle also yield a measure of the tissue impulse response function and the residue function, from which microvascular hemodynamics can be characterized. The second category of methods is the model-dependent methods, which use models of tracer transport and retention in the microvasculature. These methods do not yield independent measures of the residue function and may introduce bias when the physiology does not follow the model. Statistical methods are sometimes used, which involve treating the residue function as a deconvolution kernel and optimizing (fitting) the kernel from the experimental data using procedures such as maximum likelihood. Finally, other hemodynamic indices that can be measured from DSC-MRI data are described. J. Magn. Reson. Imaging 2005. © 2005 Wiley-Liss, Inc.