Multiple sclerosis‐related cognitive impairment (MSrCI) affects most patients with multiple sclerosis (MS), significantly contributing to disability and socioeconomic challenges. MSrCI manifests across all disease stages, mainly impacting working memory, information processing, and attention. To date, the underlying mechanisms of MSrCI remain unclear, with its pathogenesis considered multifactorial. While conventional MRI findings correlate with MSrCI, there is no consensus on reliable imaging metrics to detect or diagnose cognitive impairment (CI). Functional MRI (fMRI) has provided unique insights into the brain's neuroplasticity mechanisms, revealing evidence of compensatory mechanisms in response to tissue damage, both beneficial and maladaptive. This review summarizes the current literature on the application of resting‐state fMRI (rs‐fMRI) and task‐based fMRI (tb‐fMRI) in understanding neuroplasticity and its relationship with cognitive changes in people with MS (pwMS). Searches of databases, including PubMed/Medline, Embase, Scopus, and the Web of Science, were conducted for the most recent fMRI cognitive studies in pwMS. Key findings ifrom rs‐fMRI studies reveal disruptions in brain connectivity and hub integration, leading to CI due to decreased network efficiency. tb‐fMRI studies highlight abnormal brain activation patterns in pwMS, with evidence of increased fMRI activity in earlier disease stages as a beneficial compensatory response, followed by reduced activation correlating with increased lesion burden and cognitive decline as the disease progresses. This suggests a gradual exhaustion of compensatory mechanisms over time. These findings support fMRI not only as a diagnostic tool for MSrCI but also as a potential imaging biomarker to improve our understanding of disease progression.