Differences between region-of-interest (ROI) and pixel-by-pixel analysis of dynamic contrast enhanced (DCE) MRI data were investigated in this study with computer simulations and pre-clinical experiments. ROIs were simulated with 10, 50, 100, 200, 400, and 800 different pixels. For each pixel, a contrast agent concentration as a function of time, C(t), was calculated using the Tofts DCE-MRI model with randomly generated physiological parameters (Ktrans and ve) and the Parker population arterial input function. The average C(t) for each ROI was calculated and then Ktrans and ve for the ROI was extracted. The simulations were run 100 times for each ROI with new Ktrans and ve generated. In addition, white Gaussian noise was added to C(t) with 3, 6, and 12 dB signal-to-noise ratios to each C(t). For pre-clinical experiments, Copenhagen rats (n = 6) with implanted prostate tumors in the hind limb were used in this study. The DCE-MRI data were acquired with a temporal resolution of ~5 s in a 4.7 T animal scanner, before, during, and after a bolus injection (< 5 s) of Gd-DTPA for a total imaging duration of ~10 min. Ktrans and ve were calculated in two ways: (i) by fitting C(t) for each pixel, and then averaging the pixel values over the entire ROI, and (ii) by averaging C(t) over the entire ROI, and then fitting C(t) to extract Ktrans and ve. The simulation results showed that in heterogeneous ROIs, the pixel-by-pixel averaged Ktrans was ~25% to ~50% larger (p < 0.01) than the ROI-averaged Ktrans. At higher noise levels, the pixel-averaged Ktrans was greater than the ‘true’ Ktrans, but the ROI-averaged Ktrans was lower than the ‘true’ Ktrans. The ROI-averaged Ktrans was closer to the true Ktrans than pixel-averaged Ktrans for high noise levels. In pre-clinical experiments, the pixel-by-pixel averaged Ktrans was ~15% larger than the ROI-averaged Ktrans. Overall, with the Tofts model, the extracted physiological parameters from the pixel-by-pixel averages were larger than the ROI averages. These differences were dependent on the heterogeneity of the ROI.