A simple model is presented that allows quantitative separation of the contributions of signals from water in blood and extravascular parenchyma due to changes in blood oxygenation, induced either by brain activation or by alteration of inspired oxygen. The separation is based on the progressive attenuation of the signals in the vasculature of different levels when bipolar field gradient pulses are applied. Diffusion-weighted spin-echo echo-planar imaging sequences were used to measure signal changes under various conditions in both animals and human volunteers. Normoxic-hyperoxic episodes were induced in rats before and after injection of a superparamagnetic iron oxide contrast agent. Signal changes produced by visual stimulation were measured in human volunteers, and in volunteers subject to alternating normoxic-hyperoxic episodes, and with administration of Gd-DTPA. Analysis of the results with our simple model suggests that the apparent diffusion coefficient increases and R2 (= 1/T2) decreases upon brain activation, with a large component from extravascular water related to the decrease in the blood deoxyhemoglobin concentration. Furthermore, this study suggests that apparent diffusion coefficient of the extravascular component alone may provide localization of neuronal activation.