Principle Component Analysis (PCA) and Independent Component Analysis (ICA) were used to decompose the fMRI time series signal and separate the BOLD signal change from the structured and random noise. Rather than using component analysis to identify spatial patterns of activation and noise, the approach we took was to identify PCA or ICA components contributing primarily to the noise. These noise components were identified using an unsupervised algorithm that examines the Fourier decomposition of each component time series. Noise components were then removed before subsequent reconstruction of the time series data. The BOLD contrast sensitivity (CS(BOLD)), defined as the ability to detect a BOLD signal change in the presence of physiological and scanner noise, was then calculated for all voxels. There was an increase in CS(BOLD) values of activated voxels after noise reduction as a result of decreased image-to-image variability in the time series of each voxel. A comparison of PCA and ICA revealed significant differences in their treatment of both structured and random noise. ICA proved better for isolation and removal of structured noise, while PCA was superior for isolation and removal of random noise. This provides a framework for using and evaluating component analysis techniques for noise reduction in fMRI.