Various lines of evidence indicate that men generally experience greater sexual arousal (SA) to erotic stimuli than women. Yet, little is known regarding the neurobiological processes underlying such a gender difference. To investigate this issue, functional magnetic resonance imaging was used to compare the neural correlates of SA in 20 male and 20 female subjects. Brain activity was measured while male and female subjects were viewing erotic film excerpts. Results showed that the level of perceived SA was significantly higher in male than in female subjects. When compared to viewing emotionally neutral film excerpts, viewing erotic film excerpts was associated, for both genders, with bilateral blood oxygen level dependant (BOLD) signal increases in the anterior cingulate, medial prefrontal, orbitofrontal, insular, and occipitotemporal cortices, as well as in the amygdala and the ventral striatum. Only for the group of male subjects was there evidence of a significant activation of the thalamus and hypothalamus, a sexually dimorphic area of the brain known to play a pivotal role in physiological arousal and sexual behavior. When directly compared between genders, hypothalamic activation was found to be significantly greater in male subjects. Furthermore, for male subjects only, the magnitude of hypothalamic activation was positively correlated with reported levels of SA. These findings reveal the existence of similarities and dissimilarities in the way the brain of both genders responds to erotic stimuli. They further suggest that the greater SA generally experienced by men, when viewing erotica, may be related to the functional gender difference found here with respect to the hypothalamus. Hum. Brain Mapping 16:1–13, 2002. © 2002 Wiley-Liss, Inc.