Cortical and subcortical gray matter hypointensities on T2-weighted MR images (T2WI) occur commonly in MS brains and have been related to disease duration, clinical course, and the level of neurologic disability. These hypointensities have been reported to occur in the thalamus, basal ganglia, and rolandic cortex. We assessed whether T2 hypointensity is associated with the severity of white matter plaques and atrophy of MS brains. In 114 MS patients, hypointensity of the thalamus, putamen, caudate, and sensorimotor cortex was ordinally rated against age- and gender-matched normal controls on 1.5-T MRI fast spin-echo axial T2WI. Regional and global T2 hyperintense and T1 hypointense parenchymal lesion loads were ordinally rated. Enlargement of subarachnoid and ventricular spaces (atrophy) was ordinally rated vs. age- and gender-matched normal controls. T2 hypointensity was highly, positively correlated with many other MRI variables. Regression modeling showed that T2 hypointensity was related to total atrophy, total T2 lesion load, third ventricular enlargement, parietal atrophy, and to a lesser extent, frontal T1 lesions and cerebellar T2 lesions, but not related to gadolinium enhancement. Ordinal ratings of T2 lesions and central atrophy showed high correlations with quantitative computerized assessments. We conclude that gray matter hypointensity on T2WI may reflect pathologic iron deposition and brain degeneration in MS. This T2 hypointensity is associated with brain atrophy and other MR markers of tissue damage. Further study is warranted to determine if T2 hypointensity is predictive of disease course in MS and is a useful surrogate outcome measure in therapeutic trials.