Gradient-echo echo-planar imaging is a standard technique in functional magnetic resonance imaging (fMRI) experiments based on the blood oxygenation level-dependent (BOLD) effect. A major problem is the occurrence of susceptibility gradients near air/tissue interfaces. As a consequence, the detection of neuronal activation may be greatly compromised in certain brain areas, especially in the temporal lobes and in the orbitofrontal cortex. Common approaches to overcome this problem, such as z-shimming or the use of tailored radio frequency pulses, usually compensate only for susceptibility gradients in the slice selection direction. In the present study, the influence of susceptibility gradients in the phase encoding direction is investigated both theoretically and experimentally. It is shown that these gradients influence the effective echo time TE and may reduce considerably the local BOLD sensitivity, even in the case of acceptable image intensities. A compensation method is proposed and tested in an fMRI experiment based on a hypercapnic challenge. The results suggest that the compensation method allows for the detection of activation in brain areas which are usually unavailable for BOLD studies.