Pathological iron accumulation in the human brain is a biomarker for neurodegeneration. Several diagnostically promising MR-based methods for in vivo iron quantification were proposed, based on the empirical relationship between R2* and iron concentration. However, these do not account for different chemical forms and cellular distribution of iron. We combined post mortem MRI, advanced quantitative histology and biophysical modeling to develop a generative theory linking obtained iron concentrations to quantitative MR parameters. The impact of nanoscale molecular interaction of water with iron and of iron-rich dopaminergic neurons was quantified in substantia nigra.