Objectives: MRI T2 hypointensity in multiple sclerosis (MS)-gray matter, suggesting iron deposition, is associated with physical disability, disease course, lesion load, and brain atrophy. Ambulatory dysfunction limits quality of life; however correlation with conventional MRI remains poor. Methods: Normalized intensity on T2-weighted images was obtained in the basal ganglia, thalamus, red nucleus, and dentate nucleus in 47 MS patients and 15 healthy controls. Brain T1-hypointense and FLAIR-hype-rintense lesion volume, third ventricle width, brain parenchymal fraction and timed 25 foot walk (T25FW)-were measured in the MS group. Results: T2 hypointensity was present throughout gray matter in MS vs. controls (all p < 0.01). Dentate T2 hypointensity was the only MRI variable significantly correlated with T25FW (Pearson r=-0.355, p=0.007) and was also the best MRI correlate of physical disability (EDSS) score in regression modeling (r=-0.463, R2=0.223, p=0.004). Conclusions: T2 hypointensity is present in subcortical gray matter nuclei in patients with MS vs. normal controls. Dentate nucleus T2 hypointensity is independently related to ambulatory impairment and disability, accounting for more variance than conventional lesion and atrophy measures. This study adds more weight to the notion that T2 hypointensity is a clinically relevant marker of tissue damage in MS. Objectives: MRI T2 hypointensity in multiple sclerosis (MS) -gray matter, suggesting iron deposition, is associated with physical disability, disease course, lesion load, and brain atrophy. However correlation with conventional MRI remains poor. Methods: Normalized intensity on T2-weighted images was obtained in the basal ganglia, thalamus, red nucleus, and dentate nucleus in 47 MS patients and 15 healthy controls. Brain T1-hypointense and FLAIR-hype-rntense lesion volume, third ventricle width, Results: T2 hypointensity was present throughout gray matter in MS vs. controls (all p <0.01). Dentate T2 hypointensity was the only MRI variable correlated with MS. with T25FW (Pearson r = -0.355, p = 0.007) and also also the best MRI correlate of physical disability (EDSS) score in regression modeling (r = -0.463, R2 = 0.223, p = 0.004). Conclusions: T2 hypointens ity is present in subcortical gray matter nuclei in patients with MS vs. normal controls. Dentate nucleus T2 hypointensity is independently related to ambulatory impairment and disability, accounting for more variance than conventional lesion and atrophy measures. This study adds more weight to the notion that T2 hypointensity is a clinically relevant marker of tissue damage in MS.