Changes in neuronal activity are accompanied by the release of vasoactive mediators that cause microscopic dilation and constriction of the cerebral microvasculature and are manifested in macroscopic blood oxygenation level-dependent (BOLD) functional MRI (fMRI) signals. We used two-photon microscopy to measure the diameters of single arterioles and capillaries at different depths within the rat primary somatosensory cortex. These measurements were compared with cortical depth-resolved fMRI signal changes. Our microscopic results demonstrate a spatial gradient of dilation onset and peak times consistent with “upstream” propagation of vasodilation toward the cortical surface along the diving arterioles and “downstream” propagation into local capillary beds. The observed BOLD response exhibited the fastest onset in deep layers, and the “initial dip” was most pronounced in layer I. The present results indicate that both the onset of the BOLD response and the initial dip depend on cortical depth and can be explained, at least in part, by the spatial gradient of delays in microvascular dilation, the fastest response being in the deep layers and the most delayed response in the capillary bed of layer I.