Regions of diffuse periventricular white matter hyperintensities (PVWMH) are a common finding on T(2)-weighted MRI scans of older subjects, but their aetiology remains unclear. The aim of this study was to characterize differences in water diffusion and magnetization transfer MRI parameters between macroscopically normal-appearing white matter (NAWM) and PVWMH in a cohort of normal older subjects. Forty-two non-demented 83-year olds underwent structural, diffusion tensor and magnetization transfer MRI. Mean diffusivity (<D>), fractional anisotropy (FA), axial (lambda(ax)) and radial (lambda(rad)) diffusivity, and magnetization transfer ratio (MTR) were measured in both NAWM and PVWMH in frontal and parieto-occipital white matter, and centrum semiovale. For all three regions, PVWMH had greater <D>, lambda(ax) and lambda(rad) than NAWM, while FA and MTR were significantly reduced compared with normal tissue (p<<0.01). For PVWMH, MTR was significantly correlated (Spearman's rho in the range -0.93 to 0.70; p<0.01) with <D>, FA, lambda(ax) and lambda(rad) in all three regions. Conversely, for NAWM, the only significant correlation between MTR and a water diffusion parameter was for lambda(rad) in parieto-occipital white matter (rho=-0.40; p<0.05), with all other correlations close to the rho=0 level. These data indicate that in normal white matter, characterized by structurally coherent cell membranes, the degree of water molecule diffusion and myelination are held within relatively tight limits. However, within PVWMH, MTR correlates strongly with water diffusion parameters probably because of the pathologically associated neuronal loss, demyelination and gliosis.