Evaluation of traumatic peripheral nerve injuries has classically been based on clinical and electrophysiologic criteria. US and MRI have been widely used for morphologic assessment of nerve injury sites and concomitant lesions. In the past few years, morphologic MR neurography has significantly increased its clinical applications on the basis of three-dimensional or two-dimensional images with and without fat-suppression techniques. However, these sequences have a major drawback: absence of pathophysiologic information about functional integrity or axonal flow of peripheral nerves. In this scenario, functional MRI techniques such as diffusion-weighted imaging (DWI) or diffusion tensor imaging (DTI) can be used as a complementary tool in initial evaluation of peripheral nerve trauma or in assessment of trauma undergoing surgical repair. These approaches provide not only morphologic but also functional information about extent and degree of nerve impairment. Functional MR neurography can also be applied to selection, planning, and monitoring of surgical procedures that can be performed after traumatic peripheral nerve injuries, such as neurorrhaphy, nerve graft, or neurolysis, as it provides surgeons with valuable information about the functional status of the nerves involved and axonal flow integrity. The physical basis of DWI and DTI and the technical adjustments required for their appropriate performance for peripheral nerve evaluation are reviewed. Also, the clinical value of DWI and DTI in assessment of peripheral nerve trauma is discussed, enhancing their potential impact on selection, planning, and monitoring of surgical procedures employed for peripheral nerve repair. Online supplemental material is available for this article. ©RSNA, 2019.