The relation between pathological findings and clinical and cognitive decline in Multiple Sclerosis remains unclear. Here, we tested the hypothesis that altered functional connectivity could provide a missing link between structural findings, such as thalamic atrophy and white matter lesion load, and clinical and cognitive dysfunction. Resting-state magnetoencephalography recordings from 21 MS patients and 17 gender- and age matched controls were projected onto atlas-based regions-of-interest using beamforming. Average functional connectivity was computed for each ROI and literature-based resting-state networks using the phase-lag index. Structural measures of whole brain and thalamic atrophy and lesion load were estimated from MRI scans. Global analyses showed lower functional connectivity in the alpha2 band and higher functional connectivity in the beta band in patients with Multiple Sclerosis. Additionally, alpha2 band functional connectivity was lower for the patients in two resting-state networks, namely the default mode network and the visual network. Higher beta band functional connectivity was found in the default mode network and in the temporo-parietal network. Lower alpha2 band functional connectivity in the visual network was related to lower thalamic volumes. Beta band functional connectivity correlated positively with disability scores, most prominently in the default mode network, and correlated negatively with cognitive performance in this network. These findings illustrate the relationship between thalamic atrophy, altered functional connectivity and clinical and cognitive dysfunction in MS, which could serve as a bridge to understand how neurodegeneration is associated with altered functional connectivity and subsequently clinical and cognitive decline. © 2013 Tewarie et al.