Objectives To evaluate changes in tremor severity and motor/emotion-processing circuits in response to cognitive behavioral therapy (CBT) delivered as treatment for functional tremor (FT), the most common functional movement disorder in adults. Methods Fifteen patients with FT underwent fMRI with motor, basic-emotion, and intense-emotion tasks before and after 12 weeks of CBT. Baseline fMRI was compared to those of 25 healthy controls (HCs). The main clinical endpoint was the tremor score (sum of severity, duration, and incapacitation subscores) adapted from the Rating Scale for Psychogenic Movement Disorders (PMDRS) assessed by a blinded clinician. CBT responders were defined as those with PMDRS score reduction >75%. Anatomic and functional brain images were obtained with a 4T MRI system. Generalized linear model and region-of-interest analyses were used to evaluate before-versus-after treatment-related changes in brain activation. Results CBT markedly reduced tremor severity (p < 0.01) with remission/near remission achieved in 73.3% of the cohort. Compared to HCs, in those with FT, a functionally defined fMRI region of interest in the anterior cingulate/paracingulate cortex showed increased activation at baseline and decreased activation after CBT during basic-emotion processing (p = 0.012 for CBT responders). Among CBT responders, the change in anterior cingulate/paracingulate was more significant in those with more severe baseline depression (r = 0.75, p < 0.01). Conclusions Tremor severity improved significantly after CBT. The improvement was associated with changes in the anterior cingulate/paracingulate activity, which may represent a marker of emotional dysregulation in FT and a predictor of treatment response. Classification of evidence This study provides Class III evidence that CBT significantly improves tremor severity in patients with functional tremor.