Twenty patients with extremity soft tissue tumors were prospectively evaluated with magnetic resonance imaging (MRI) and computed tomography (CT) scans with subsequent anatomic correlation of surgical findings. MRI and CT had a similar percentage of accuracy in assessing tumor relationship with major neurovascular (80% and 70%, respectively) and skeletal (80% and 75%, respectively) structures. MRI was significantly better than CT in displaying contrast between tumor and muscle when using the T2 weighted spin echo (SE) (p2 less than 0.002) and inversion recovery (IR) (p2 less than 0.005) pulse sequences. MRI and CT were comparable in demonstrating contrast between tumor and fat. The contrast between tumor and vessel was better displayed by MRI compared with CT when using the T1 weighted SE (p2 less than 0.001) and T2 weighted SE (p2 less than 0.001) pulse sequences. T1 and T2 values were measured on fresh tumor and normal tissue samples and were used to predict relative contrast on different MRI pulse sequences using isosignal contour plots. MRI appears to offer several advantages over CT in the evaluation of extremity soft tissue tumors.