Combined EEG/fMRI recording has been used to localize the generators of EEG events and to identify subject state in cognitive studies and is of increasing interest. However, the large EEG artifacts induced during fMRI have precluded simultaneous EEG and fMRI recording, restricting study design. Removing this artifact is difficult, as it normally exceeds EEG significantly and contains components in the EEG frequency range. We have developed a recording system and an artifact reduction method that reduce this artifact effectively. The recording system has large dynamic range to capture both low-amplitude EEG and large imaging artifact without distortion (resolution 2 μV, range 33.3 mV), 5-kHz sampling, and low-pass filtering prior to the main gain stage. Imaging artifact is reduced by subtracting an averaged artifact waveform, followed by adaptive noise cancellation to reduce any residual artifact. This method was validated in recordings from five subjects using periodic and continuous fMRI sequences. Spectral analysis revealed differences of only 10 to 18% between EEG recorded in the scanner without fMRI and the corrected EEG. Ninety-nine percent of spike waves (median 74 μV) added to the recordings were identified in the corrected EEG compared to 12% in the uncorrected EEG. The median noise after artifact reduction was 8 μV. All these measures indicate that most of the artifact was removed, with minimal EEG distortion. Using this recording system and artifact reduction method, we have demonstrated that simultaneous EEG/fMRI studies are for the first time possible, extending the scope of EEG/fMRI studies considerably.