Anisotropic water diffusion in neural fibers such as nerve, white matter in spinal cord, or white matter in brain forms the basis for the utilization of diffusion tensor imaging (DTI) to track fiber pathways. The fact that water diffusion is sensitive to the underlying tissue microstructure provides a unique method of measuring the orientation and integrity of these neural fibers which may be useful in assessing a number of neurological disorders. The purpose of this chapter is to characterize the relationship of nuclear magnetic resonance measurements of water diffusion and its anisotropy (i.e. directional dependence) with the underlying microstructure of neural fibers. The emphasis will be on model neurological systems both in vitro and in vivo. DTI is useful for identifying abnormal brain regions deemed “normal” on conventional MRI. Numerous model and clinical research studies have shown that DTI is sensitive to underlying abnormalities that are not apparent on conventional images. An understanding of the relationship between the microstructural components of the white matter tracts and water diffusion is needed to aid in the interpretation of DTI data acquired in various neurological disorders, usually in the absence of any corroborating pathological information Many basic and clinical DTI studies, particularly ones combined with histological comparisons, provide the foundation for a better understanding of what these non-invasive water diffusion measurements may reflect at the microstructural level of neural fibers.