Background Preserved integrity of the corticospinal tract (CST) is a marker of good upper-limb behavior and recovery following stroke. However, there is less understanding of neural mechanisms that might help facilitate upper-limb motor recovery in stroke survivors with extensive CST damage. Objective The purpose of this study was to investigate resting state functional connectivity in chronic stroke survivors with different levels of CST damage and to explore neural correlates of greater upper-limb motor performance in stroke survivors with compromised ipsilesional CST integrity. Methods Thirty chronic stroke survivors (24 males, aged 64.7 ± 10.8 years) participated in this study. Three experimental sessions were conducted to: 1) obtain anatomical (T1, T2) structural (diffusion) and functional (resting state) MRI sequences, 2) determine CST integrity with transcranial magnetic stimulation (TMS) and conduct assessments of upper-limb behavior, and 3) reconfirm CST integrity status. Participants were divided into groups according to the extent of CST damage. Those in the extensive CST damage group did not show TMS evoked responses and had significantly lower ipsilesional fractional anisotropy. Results Of the 30 chronic stroke survivors, 12 were categorized as having extensive CST damage. Stroke survivors with extensive CST damage had weaker functional connectivity in the ipsilesional sensorimotor network and greater functional connectivity in the ipsilesional fronto-parietal network compared to those with preserved CST integrity. For participants with extensive CST damage, improved motor performance was associated with greater functional connectivity of the ipsilesional fronto-parietal network and higher fractional anisotropy of the ipsilesional rostral superior longitudinal fasciculus. Conclusions Stroke survivors with extensive CST damage have greater resting state functional connectivity of an ipsilesional fronto-parietal network that appears to be a behaviorally relevant neural mechanism that improves upper-limb motor performance.