Background Use of χ-separation imaging can provide surrogates for iron and myelin that relate closely to abnormal changes in multiple sclerosis (MS) lesions. Purpose To evaluate the appearances of MS and neuromyelitis optica spectrum disorder (NMOSD) brain lesions on χ-separation maps and explore their diagnostic value in differentiating the two diseases in comparison with previously reported diagnostic criteria. Materials and Methods This prospective study included individuals with MS or NMOSD who underwent χ-separation imaging from October 2017 to October 2020. Positive (χ<sub>pos</sub>) and negative (χ<sub>neg</sub>) susceptibility were estimated separately by using local frequency shifts and calculating R2' (R2' = R2* - R2). R2 mapping was performed with a machine learning approach. For each lesion, presence of the central vein sign (CVS) and paramagnetic rim sign (PRS) and signal characteristics on χ<sub>neg</sub> and χ<sub>pos</sub> maps were assessed and compared. For each participant, the proportion of lesions with CVS, PRS, and hypodiamagnetism was calculated. Diagnostic performances were assessed using receiver operating characteristic (ROC) curve analysis. Results A total of 32 participants with MS (mean age, 34 years ± 10 [SD]; 25 women, seven men) and 15 with NMOSD (mean age, 52 years ± 17; 14 women, one man) were evaluated, with a total of 611 MS and 225 NMOSD brain lesions. On the χ<sub>neg</sub> maps, 80.2% (490 of 611) of MS lesions were categorized as hypodiamagnetic versus 13.8% (31 of 225) of NMOSD lesions (<i>P</i> < .001). Lesion appearances on the χ<sub>pos</sub> maps showed no evidence of a difference between the two diseases. In per-participant analysis, participants with MS showed a higher proportion of hypodiamagnetic lesions (83%; IQR, 72-93) than those with NMOSD (6%; IQR, 0-14; <i>P</i> < .001). The proportion of hypodiamagnetic lesions achieved excellent diagnostic performance (area under the ROC curve, 0.96; 95% CI: 0.91, 1.00). Conclusion On χ-separation maps, multiple sclerosis (MS) lesions tend to be hypodiamagnetic, which can serve as an important hallmark to differentiate MS from neuromyelitis optica spectrum disorder. © RSNA, 2022 <i>Supplemental material is available for this article.</i>