Background: Acute psychological stress impairs higher-order cognitive function such as working memory (WM). Similar impairments are seen in various psychiatric disorders that are associated with higher susceptibility to stress and with prefrontal cortical dysfunctions, suggesting that acute stress may play a potential role in such dysfunctions. However, it remains unknown whether acute stress has immediate effects on WM-related prefrontal activity. Methods: Using functional magnetic resonance imaging (fMRI), we investigated neural activity of 27 healthy female participants during a blocked WM task (numerical N-back) while moderate psychological stress was induced by viewing strongly aversive (vs. neutral) movie material together with a self-referencing instruction. To assess stress manipulation, autonomic and endocrine, as well as subjective, measurements were acquired throughout the experiment. Results: Successfully induced acute stress resulted in significantly reduced WM-related activity in the dorsolateral prefrontal cortex (DLPFC), and was accompanied by less deactivation in brain regions that are jointly referred to as the default mode network. Conclusions: This study demonstrates that experimentally induced acute stress in healthy volunteers results in a reduction of WM-related DLPFC activity and reallocation of neural resources away from executive function networks. These effects may be explained by supraoptimal levels of catecholamines potentially in conjunction with elevated levels of cortisol. A similar mechanism involving acute stress as a mediating factor may play an important role in higher-order cognitive deficits and hypofrontality observed in various psychiatric disorders. © 2009 Society of Biological Psychiatry.