AbstractTask‐related head movement during acquisition of fMRI data represents a serious confound for both motion correction and estimates of task‐related activation. Cost functions implemented in most conventional motion‐correction algorithms compare two volumes for similarity but fail to account for signal variability that is not due to motion (e.g., brain activation). We therefore recently proposed the theoretical basis for a novel method for fMRI motion correction, termed motion‐corrected independent component analysis (MCICA), that allows for brain activation present in an fMRI time‐series to be implicitly modeled and mitigates motion‐induced signal changes without having to directly estimate the motion parameters (Liao et al., IEEE Transactions on Medical Imaging 2005;25:29–44). To explore the effects of non‐movement‐related signal changes on registration error, we performed several previously proposed test simulations (Freire et al., IEEE Transactions on Medical Imaging 2002;21:470–484) to evaluate the performance of MCICA and compare it with the conventional square‐of‐difference‐based measures such as LS‐SPM and LS‐AIR. We demonstrate that for both simulated data and real fMRI images, the proposed MCICA method performs favorably. Specifically, in simulations MCICA was more robust to the addition of simulated activation, and did not lead to the detection of false activations after correction for simulated task‐correlated motion. With actual data from a motor fMRI experiment, the time course of the derived continually task‐related ICA component became more correlated with the underlying behavioral task after preprocessing with MCICA compared to other methods, and the associated activation map was more clustered in the primary motor and supplementary motor cortices without spurious activation at the brain edge. We conclude that assessing the statistical properties of a motion‐corrupted volume in relation to other volumes in the series, as is done with MCICA, is an accurate means of differentiating between motion‐induced signal changes and other sources of variability in fMRI data. Magn Reson Med, 2006. © 2006 Wiley‐Liss, Inc.