Human upright posture is a product of a complex dynamic system that relies on integration of input from multimodal sensory sources. Extensive research has explored the role of visual, vestibular, and somatosensory systems in the control of upright posture. However, the role of higher cognitive function in a participant's assessment of postural stability has been less studied. In previous research, we showed specific neural activation patterns in EEG associated with recognition of unstable postures in young healthy participants. Similar EEG patterns have been recently observed in regulation of posture equilibrium in dynamic stances. This article evaluates participants' postural stability in dynamic stances and neural activation patterns underlying visual recognition of unstable postures using event-related functional MRI (fMRI). Our results show that the "stable" participants were successful in recognition of unstable postures of a computer-animated body model and experienced egocentric motion. Successful recognition of unstable postures in these participants induces activation of distinct areas of the brain including bilateral parietal cortex, anterior cingulate cortex, and bilateral cerebellum. In addition, significant activation is observed in basal ganglia (caudate nucleus and putamen) but only during perception of animated postures. Our findings suggest the existence of modality-specific distributed activation of brain areas responsible for detection of postural instability.