Previous experiments found that placebos produced small decreases in neural activity of pain-related areas of the brain, yet decreases were only statistically significant after termination of stimuli and in proximity to when subjects rated them. These changes could reflect report bias rather than analgesia. This functional magnetic resonance imaging (fMRI) study examined whether placebo analgesia is accompanied by reductions in neural activity in pain-related areas of the brain during the time of stimulation. Brain activity of irritable bowel syndrome patients was measured in response to rectal distension by a balloon barostat. Large reductions in pain and in brain activation within pain-related regions (thalamus, somatosensory cortices, insula, and anterior cingulate cortex) occurred during the placebo condition. Results indicate that decreases in activity were related to placebo suggestion and a second factor (habituation/attention/conditioning). Although many factors influence placebo analgesia, it is accompanied by reduction in pain processing within the brain in clinically relevant conditions.