Pharmacological functional MRI (phMRI) examines the impact of pharmacologically induced neurochemical changes on brain function at a system level. The current phMRI study directly compared effects of cholinergic stimulation on brain function between patients with Alzheimer's disease and mild cognitive impairment, a disease stage preceding the development of Alzheimer's disease. Brain function during recognition of (un)familiar information was examined for changes after exposure to galantamine, a cholinesterase inhibitor used for treating memory deficits in Alzheimer's disease. Alzheimer patients [n = 18; age 74.5 years ± 8.2; Mini-Mental State Examination (MMSE) 22.5 ± 2.4] and patients with mild cognitive impairment (n = 28; mean age 73.6 ± 7.5; MMSE 27.0 ± 1.2) were scanned during face recognition under three different conditions: at baseline, and after acute (single dose) and prolonged exposure (5 days) to galantamine. Functional data were analysed in an event-related fashion. In both groups, acute exposure produced strong increases in brain activation (Z > 3.1). Prolonged exposure produced less strong effects that mainly involved decreases in activation (Z > 3.1). In mild cognitive impairment, acute exposure increased activation in posterior cingulate, left inferior parietal, and anterior temporal lobe. Prolonged exposure decreased activation in similar posterior cingulate areas, and in bilateral prefrontal areas. Effects were stronger for positive ('familiar') than for negative ('unfamiliar') decisions, indicating that the effect was specific to memory retrieval. In Alzheimer patients, acute exposure increased activation bilaterally in hippocampal areas, whereas prolonged exposure decreased activation in these areas. Effects were more pronounced for negative than for positive decisions, suggesting a preferential effect on memory encoding. Unique profiles of signal reactivity were found in a number of areas, including left inferior parietal lobe and left hippocampus proper. The reactivity of posterior cingulate and hippocampal structures to cholinergic challenge suggests a key role of the cholinergic system in the functional processes that lead to Alzheimer's disease. The differential response to cholinergic challenge in mild cognitive impairment and Alzheimer patients may reflect a difference in the functional status of the cholinergic system between both groups, which is in line with recent results showing a differential clinical response to cholinergic treatment.