Neuroimaging studies of humans have provided inconsistent evidence with respect to the response properties of the fusiform face area (FFA). It has been claimed that neural populations within this region are sensitive to subtle differences between individual faces only when they are perceived as distinct identities [P. Rotshtein et al. (2005)Nature Neuroscience, 8, 107–113]. However, sensitivity to subtle changes of identity was found in previous studies using unfamiliar faces, for which categorical perception is less pronounced. Using functional magnetic resonance adaptation and morph continua of personally familiar faces, we investigated sensitivity to subtle changes between faces that were located either on the same or opposite sides of a categorical perceptual boundary. We found no evidence for categorical perception within the FFA, which exhibited reliable sensitivity to subtle changes of face identity whether these were perceived as distinct identities, or not. On the contrary, both the posterior superior temporal sulcus and prefrontal cortex exhibited categorical perception, as subtle changes between faces perceived as different identities yielded larger release from adaptation than those perceived as the same identity. These observations suggest that, whereas the FFA discriminates subtle physical changes of personally familiar faces, other regions encode faces in a categorical fashion.