White matter hyperintensities (WMH) of presumed vascular origin are a common finding in brain magnetic resonance imaging of older individuals and contribute to cognitive and functional decline. It is unknown how WMH form, although white matter degeneration is characterized pathologically by demyelination, axonal loss, and rarefaction, often attributed to ischemia. Changes within normal-appearing white matter (NAWM) in subjects with WMH have also been reported but have not yet been fully characterized. Here, we describe the in vivo imaging signatures of both NAWM and WMH in a large group of community-dwelling older people of similar age using biomarkers derived from magnetic resonance imaging that collectively reflect white matter integrity, myelination, and brain water content. Fractional anisotropy (FA) and magnetization transfer ratio (MTR) were significantly lower, whereas mean diffusivity (MD) and longitudinal relaxation time (T1) were significantly higher, in WMH than NAWM (p < 0.0001), with MD providing the largest difference between NAWM and WMH. Receiver operating characteristic analysis on each biomarker showed that MD differentiated best between NAWM and WMH, identifying 94.6% of the lesions using a threshold of 0.747 × 10−9 m2s−1 (area under curve, 0.982; 95% CI, 0.975–0.989). Furthermore, the level of deterioration of NAWM was strongly associated with the severity of WMH, with MD and T1 increasing and FA and MTR decreasing in NAWM with increasing WMH score, a relationship that was sustained regardless of distance from the WMH. These multimodal imaging data indicate that WMH have reduced structural integrity compared with surrounding NAWM, and MD provides the best discriminator between the 2 tissue classes even within the mild range of WMH severity, whereas FA, MTR, and T1 only start reflecting significant changes in tissue microstructure as WMH become more severe.