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Quantitative cerebral perfusion imaging using dynamic susceptibility contrast (DSC) MRI requires the dynamic measurement of changes in contrast agent concentration in cerebral tissue and its feeding artery. In this work the tracer kinetics approach to general tracer-based perfusion imaging is reviewed. In the typical practical setting, measurements of change in transverse relaxation (ΔR2) derived from MR signals are assumed to be substitutes for true concentration measurements. The implications and limitations of this assumption are reviewed in the light of various results obtained in theoretical, simulated, and experimental studies. The mechanisms of R2 changes in biological media are discussed. These mechanisms operate over different spatial scales and differentially influence gradient-echo (GE) and spin-echo (SE) MRI signals. This differential sensitivity can be used to assess vessel size in the microvasculature. Finally, the need for well controlled experimental data to provide input parameters and/or experimental tests of theoretical models is emphasized. J. Magn. Reson. Imaging 2005. © 2005 Wiley-Liss, Inc.