Here we use NODDI modeling of multi-shell diffusion MRI to investigate whether changes in orientation-dispersion index (ODI) or intracellular volume fraction (Vic) can predict the later emergence of IFN-α-induced fatigue. Eighteen patients initiating IFN-α based treatment for hepatitis-C underwent diffusion MRI and blood sampling at baseline and 4 hours after their first IFN-α injection. They were then followed up with regular psychological assessments for 12 weeks of treatment. IFN-α injection stimulated an acute inflammatory cytokine response and evoked acute fatigue that peaked between 4 and 12 weeks of treatment. Within the brain, IFN-α induced an acute increase in intracellular volume fraction in patients that experienced a simultaneous increase in IFN-α induced fatigue but not patients that did not. Acute changes in striatal microstructure additionally predicted the continued development of fatigue but not mood symptoms 4 and 8 weeks later into treatment. Our findings highlight the value of NODDI as a potential in vivo biomarker of the central effects of peripheral inflammation. We highlight the exquisite sensitivity of the striatum to IFN-α and further implicate striatal perturbation in IFN-α-induced fatigue.