Magnetic resonance (MR) guided optical breast imaging is a promising modality to improve the specificity of breast imaging, because it provides high-resolution quantitative maps of total hemoglobin, oxygen saturation, water content, and optical scattering. These properties have been shown to distinguish malignant from benign lesions. However, the optical detection hardware required for deep tissue imaging has poor spectral sensitivity which limits accurate water quantification; this reduces the accuracy of hemoglobin quantification. We present a methodology to improve optical quantification by utilizing the ability of Dixon MR imaging to quantitatively estimate water and fat; this technique effectively reduces optical crosstalk between water and oxyhemoglobin. The techniques described in this paper reduce hemoglobin quantification error by as much as 38%, as shown in a numerical phantom, and an experimental phantom. Error is reduced by as much 20% when imperfect MR water quantification is given. These techniques may also increase contrast between diseased and normal tissue, as shown in breast tissue in vivo. It is also shown that using these techniques may permit fewer wavelengths to be used with similar quantitative accuracy, enabling higher temporal resolution. In addition, it is shown that these techniques can improve the ability of MRI to quantify water in the presence of bias in the Dixon water/fat separation.