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Brain-derived neurotrophic factor (BDNF) signaling is implicated in the aetiology of many psychiatric disorders associated with altered emotional processing. Altered peripheral (plasma) BDNF levels have been proposed as a biomarker for neuropsychiatric disease risk in humans. However the relationship between peripheral and central BDNF levels and emotional brain activation is unknown. We used heterozygous BDNF knockdown rats (BDNF+/- ) to examine the effects of genetic variation in the BDNF gene on peripheral and central BDNF levels and emotional brain activation as assessed by awake fMRI. BDNF+/- and control rats were trained to associate a flashing light (conditioned stimulus; CS) with foot-shock, and brain activation in response to the CS was measured 24h later in awake rats using fMRI. Central and peripheral BDNF levels were decreased in BDNF+/- rats compared to control rats. Activation of fear circuitry (amygdala, periaqueductal gray, granular insular) was seen in control animals, however activation of this circuitry was absent in BDNF+/- animals. Behavioral experiments confirmed impaired conditioned fear responses in BDNF+/- rats, despite intact innate fear responses. These data confirm a positive correlation (r = 0.86, 95% CI [0.55, 0.96]; P = 0.0004) between peripheral and central BDNF levels and indicate a functional relationship between BDNF levels and emotional brain activation as assessed by fMRI. The results demonstrate the use of rodent fMRI as a sensitive tool for measuring brain function in preclinical translational studies using genetically modified rats and support the use of peripheral BDNF as a biomarker of central affective processing.