This paper presents a method for correcting the geometric and greyscale distortions in diffusion-weighted MRI that result from inhomogeneities in the static magnetic field. These inhomogeneities may due to imperfections in the magnet or to spatial variations in the magnetic susceptibility of the object being imaged—so called susceptibility artifacts. Echo-planar imaging (EPI), used in virtually all diffusion weighted acquisition protocols, assumes a homogeneous static field, which generally does not hold for head MRI. The resulting distortions are significant, sometimes more than ten millimeters. These artifacts impede accurate alignment of diffusion images with structural MRI, and are generally considered an obstacle to the joint analysis of connectivity and structure in head MRI. In principle, susceptibility artifacts can be corrected by acquiring (and applying) a field map. However, as shown in the literature and demonstrated in this paper, field map corrections of susceptibility artifacts are not entirely accurate and reliable, and thus field maps do not produce reliable alignment of EPIs with corresponding structural images. This paper presents a new, image-based method for correcting susceptibility artifacts. The method relies on a variational formulation of the match between an EPI baseline image and a corresponding T2-weighted structural image but also specifically accounts for the physics of susceptibility artifacts. We derive a set of partial differential equations associated with the optimization, describe the numerical methods for solving these equations, and present results that demonstrate the effectiveness of the proposed method compared with field-map correction.