There is considerable evidence from animal studies that the mesolimbic and mesocortical dopamine systems are sensitive to circulating gonadal steroid hormones. Less is known about the influence of estrogen and progesterone on the human reward system. To investigate this directly, we used functional MRI and an event-related monetary reward paradigm to study women with a repeated-measures, counterbalanced design across the menstrual cycle. Here we show that during the midfollicular phase (days 4-8 after onset of menses) women anticipating uncertain rewards activated the orbitofrontal cortex and amygdala more than during the luteal phase (6-10 days after luteinizing hormone surge). At the time of reward delivery, women in the follicular phase activated the midbrain, striatum, and left fronto-polar cortex more than during the luteal phase. These data demonstrate augmented reactivity of the reward system in women during the midfollicular phase when estrogen is unopposed by progesterone. Moreover, investigation of between-sex differences revealed that men activated ventral putamen more than women during anticipation of uncertain rewards, whereas women more strongly activated the anterior medial prefrontal cortex at the time of reward delivery. Correlation between brain activity and gonadal steroid levels also revealed that the amygdalo-hippocampal complex was positively correlated with estradiol level, regardless of menstrual cycle phase. Together, our findings provide evidence of neurofunctional modulation of the reward system by gonadal steroid hormones in humans and establish a neurobiological foundation for understanding their impact on vulnerability to drug abuse, neuropsychiatric diseases with differential expression across males and females, and hormonally mediated mood disorders.