Most of the human body is made up of water (hydrogen and oxygen atoms). At the centre of each hydrogen atom is an even smaller particle called a proton. Protons are like tiny magnets and are very sensitive to magnetic fields.
When you lie under the powerful scanner magnets, the protons in your body line up in the same direction, in the same way that a magnet can pull the needle of a compass.
Short bursts of radio waves are then sent to certain areas of the body, knocking the protons out of alignment. However, when the radio waves are turned off, the protons realign and send out radio signals, picked up by the MRI receivers. These signals provide information about the exact location of the protons in the body.
They also help to distinguish between the various types of tissue in the body, because the protons in different types of tissue realign at different speeds and produce distinct signals. More here.