Although tumors of the brain stem have traditionally been classified as a single entity, these tumors are increasingly being recognized as a heterogeneous group, with some subgroups having better prognoses for long-term survival. Although several systems for classification of brain stem tumors have been proposed, none have been based on data derived from contrast-enhanced magnetic resonance (MR) imaging. In this review, we present a classification scheme based on our review of the literature and of the MR scans of 64 patients with brain stem tumors. In addition, we assess the contribution of gadolinium to the classification of brain stem tumors and correlate the various tumor subtypes, based on MR appearance, with prognosis. Our results suggest that the most important factor in determining prognosis based on MR characteristics is whether the tumor is diffuse or focal. Focal tumors have an excellent prognosis regardless of the site of tumor origin. Diffuse tumors of the mesencephalon and pons have a significantly poorer prognosis than focal tumors (p = 0.0013), with diffuse pontine tumors having the worst prognosis. Differentiation of diffuse and focal medullary tumors was difficult, possibly explaining the lack of significant difference in the survival of patients with diffuse versus focal medullary tumors. The presence or absence of enhancement after the administration of paramagnetic contrast has no significant relation with outcome, overall or within specific tumor subgroups.