A physiological artifact reduction method based on extracting respiratory motion and cardiac pulsation directly from functional MR data is described. In fast low angle shot (FLASH), respiratory cycles are derived utilizing the phase of the center of a navigator echo, in echo-planar imaging (EPI) from the phase of the center k-space point. Cardiac cycles are determined from projections obtained from the navigator echo (FLASH) and the center k-space line (EPI). Because direct extraction of physiological parameters eliminates the need for external monitoring, the method can be more readily implemented. Experimental results illustrate that the technique provides effective compensation for physiology-related signal fluctuations in functional MRI and performs as well as the retrospective technique using external physiological monitoring.