OBJECTIVE: Preoperative magnetic resonance imaging (MRI), functional MRI, diffusion tensor MRI, magnetic resonance spectroscopy, and positron-emission tomographic scans may be aligned to intraoperative MRI to enhance visualization and navigation during image-guided neurosurgery. However, several effects (both machine- and patient-induced distortions) lead to significant geometric distortion of intraoperative MRI. Therefore, a precise alignment of these image modalities requires correction of the geometric distortion. We propose and evaluate a novel method to compensate for the geometric distortion of intraoperative 0.5-T MRI in image-guided neurosurgery. METHODS: In this initial pilot study, 11 neurosurgical procedures were prospectively enrolled. The scheme used to correct the geometric distortion is based on a nonrigid registration algorithm introduced by our group. This registration scheme uses image features to establish correspondence between images. It estimates a smooth geometric distortion compensation field by regularizing the displacements estimated at the correspondences. A patient-specific linear elastic material model is used to achieve the regularization. The geometry of intraoperative images (0.5 T) is changed so that the images match the preoperative MRI scans (3 T). RESULTS: We compared the alignment between preoperative and intraoperative imaging using 1) only rigid registration without correction of the geometric distortion, and 2) rigid registration and compensation for the geometric distortion. We evaluated the success of the geometric distortion correction algorithm by measuring the Hausdorff distance between boundaries in the 3-T and 0.5-T MRIs after rigid registration alone and with the addition of geometric distortion correction of the 0.5-T MRI. Overall, the mean magnitude of the geometric distortion measured on the intraoperative images is 10.3 mm with a minimum of 2.91 mm and a maximum of 21.5 mm. The measured accuracy of the geometric distortion compensation algorithm is 1.93 mm. There is a statistically significant difference between the accuracy of the alignment of preoperative and intraoperative images, both with and without the correction of geometric distortion (P < 0.001). CONCLUSION: The major contributions of this study are 1) identification of geometric distortion of intraoperative images relative to preoperative images, 2) measurement of the geometric distortion, 3) application of nonrigid registration to compensate for geometric distortion during neurosurgery, 4) measurement of residual distortion after geometric distortion correction, and 5) phantom study to quantify geometric distortion.