Background: Pathophysiological basis of Magnetisation Transfer Ratio (MTR) reduction in multiple sclerosis still remains a matter of controversy. Optic nerve represents an ideal model to study the consequences of axonal loss and demyelination on MTR since effects of disease on the optic nerve are clinically apparent and potentially quantifiable by objective means. By measuring the latency of multifocal visual evoked potentials (mfVEP) (measure of optic nerve conduction) and Retinal Nerve Fiber Layer (RNFL) thickness (measure of axonal damage) we investigated the effect of neurodegeneration and demyelination on MTR after an episode of optic neuritis (ON). Methods: 23 patients with a single unilateral episode of ON and 10 healthy volunteers were enrolled. Orbital MRI including MTR protocol, Optical Coherence Tomography and Multifocal VEP were performed at post-acute stage of ON. Results: Average MTR of affected eye was significantly reduced as compared to the fellow eye and normal controls. There was a highly significant correlation between MTR and measures of axonal loss (RNFL thickness and mfVEP amplitude), which was independent on the level of demyelination. While latency delay also correlated significantly with MTR, correlation became non-significant when adjusted for the degree of axonal loss. There was a significant reduction of MTR in a group of patients with extensive axonal damage, while MTR remained normal in a group of patients with extensive demyelination, but little or no axonal loss. Conclusion: Results of this study indicate that reduction of optic nerve MTR after an episode of ON has a strong association with the degree of axonal damage, but not with demyelination.