Magnetoencephalography (MEG) is a technique used to measure the magnetic fields generated from neuronal activity in the brain. MEG has a high temporal resolution on the order of milliseconds and provides a more direct measure of brain activity when compared with hemodynamic-based neuroimaging methods such as magnetic resonance imaging and positron emission tomography. The current review focuses on basic features of MEG such as the instrumentation and the physics that are integral to the signals that can be measured, and the principles of source localization techniques, particularly the physics of beamforming and the techniques that are used to localize the signal of interest. In addition, we review several metrics that can be used to assess functional coupling in MEG and describe the advantages and disadvantages of each approach. Lastly, we discuss the current and future applications of MEG.