Functional magnetic resonance imaging (fMRI) research with infants and toddlers has increased rapidly over the past decade, and provided a unique window into early brain development. In the current report, we review the state of the literature, which has established the feasibility and utility of task-based fMRI and resting state functional connectivity MRI (rs-fcMRI) during early periods of brain maturation. These methodologies have been successfully applied beginning in the neonatal period to increase understanding of how the brain both responds to environmental stimuli, and becomes organized into large-scale functional systems that support complex behaviors. We discuss the methodological challenges posed by this promising area of research. We also highlight that despite these challenges, early work indicates a strong potential for these methods to influence multiple research domains. As an example, we focus on the study of early life stress and its influence on brain development and mental health outcomes. We illustrate the promise of these methodologies for building on, and making important contributions to, the existing literature in this field.