We present a new method for advanced image processing to separately quantify significant decreases and increases in the magnetization transfer ratio (MTR) of individual voxels of MS lesions as markers of demyelination and remyelination. We used this method to analyze the evolution of MTR in individual voxels of an acute, Gadolinium (Gd)-enhancing lesion that was available for pathology. Over 6.5 months following enhancement, MTR was low and stable in the lesion center (81% of the initially Gd-enhancing lesion volume (GdLV)) and MTR increased at the lesion border with normal-appearing white matter (14%GdLV). The estimated error of these measurements was less than 1.8%GdLV based on scan/rescan analysis. Histopathological analysis confirmed a demyelinated lesion centre with diffuse presence of macrophages/microglia and marked loss of oligodendrocytes and a partially remyelinated lesion border with diffuse presence of macrophages/microglia and relatively more oligodendrocytes compared to the lesion centre. The correlation of imaging and histopathological findings support the validity and sensitivity of our method of voxel-based MTR image processing for monitoring demyelination and remyelination in vivo.