Several studies have shown the influence of fragrances on attentional functions and affective state in humans. The present study aimed to investigate the effects of the monoterpenoid compounds 1,8‐cineole and (–)‐linalool on the neuronal substrate of working memory, cognitive performance, physiological arousal, and affect. To this end, brain activation was assessed using functional magnetic resonance imaging (fMRI) in 69 young healthy adults while they performed a 1‐back task during inhalation or dermal application of one of the fragrances. The functional activation data of 51 subjects were included in the statistical analysis. Each condition was compared with an appropriate placebo condition without any fragrances. In addition, heart rate and respiration rate were measured. Before and after fMRI, affective state was assessed by means of rating scales. The results showed significant functional changes in brain areas related to working memory as a function of both fragrance and administration. Specifically, relative to placebo dermal application of 1,8‐cineole increased brain activation in the frontal cortex, whereas dermal (–)‐linalool increased cerebral blood flow in the basal ganglia. However, no such changes were observed after inhalation. In addition, dermal (–)‐linalool decreased error rate in the working memory task, while 1,8‐cineole did not affect performance. No effects of fragrance administration were detected on physiological arousal or affective state. These findings demonstrate that fragrances differentially affect brain activation and working memory in humans and emphasize the importance of the mode of administration when studying the effects of odorants on human cognition.