Quick Overview
Please note that there are different common names for this artifact.

During frequency encoding, fat protons precess slower than water protons in the same slice because of their magnetic shielding. Through the difference in resonance frequency between water and fat, protons at the same location are misregistrated (dislocated) by the Fourier transformation, when converting MRI signals from frequency to spatial domain. This chemical shift misregistration cause accentuation of any fat-water interfaces along the frequency axis and may be mistaken for pathology. Where fat and water are in the same location, this artifact can be seen as a bright or dark band at the edge of the anatomy.
Protons in fat and water molecules are separated by a chemical shift of about 3.5 ppm. The actual shift in Hertz (Hz) depends on the magnetic field strength of the magnet being used. Higher field strength increases the misregistration, while in contrast a higher gradient strength has a positive effect. For a 0.3 T system operating at 12.8 MHz the shift will be 44.8 Hz compared with a 223.6 Hz shift for a 1.5 T system operating at 63.9 MHz.

For artifact reduction helps a smaller water fat shift (higher bandwidth), a higher matrix, an in phase TE or a spin echo technique. Since the misregistration offset is present in the read out axis the patient may be rescanned with this axis parallel to the fat-water interface. Steeper gradient may be employed to reduce the chemical shift offset in mm. Another strategy is to employ specialized pulse sequences such as fat saturation or inversion recovery imaging. Fat suppression techniques eliminate chemical shift artifacts caused by the lack of fat signal.

See also Black Boundary Artifact and Magnetic Resonance Spectroscopy.