Functional magnetic resonance imaging (fMRI) in the pediatric population promises to provide novel insights into the nature of both normal and abnormal functional brain development as well as changes in brain function due to various interventions. Although acquisition of fMRI data from children is associated with a number of methodological challenges, primarily compliance and head motion, good quality data can be obtained. For example, conditioning and personal interactions can improve compliance, and motion reduction techniques can successfully reduce artifacts due to head motion. Analysis of pediatric fMRI data also involves challenges regarding spatial normalization and characterization of the hemodynamic response across development. Substantial progress has been made in understanding cognitive function and developmental disorders in children, but attention to the methodological issues raised in this review and continued investigations in this area are expected to result in further progress.