PURPOSE: To examine the effects of the reconstruction algorithm of magnitude images from multichannel diffusion MRI on fiber orientation estimation. THEORY AND METHODS: It is well established that the method used to combine signals from different coil elements in multichannel MRI can have an impact on the properties of the reconstructed magnitude image. Using a root-sum-of-squares approach results in a magnitude signal that follows an effective noncentral-χ distribution. As a result, the noise floor, the minimum measurable in the absence of any true signal, is elevated. This is particularly relevant for diffusion-weighted MRI, where the signal attenuation is of interest. RESULTS: In this study, we illustrate problems that such image reconstruction characteristics may cause in the estimation of fiber orientations, both for model-based and model-free approaches, when modern 32-channel coils are used. We further propose an alternative image reconstruction method that is based on sensitivity encoding (SENSE) and preserves the Rician nature of the single-channel, magnitude MR signal. We show that for the same k-space data, root-sum-of-squares can cause excessive overfitting and reduced precision in orientation estimation compared with the SENSE-based approach. CONCLUSION: These results highlight the importance of choosing the appropriate image reconstruction method for tractography studies that use multichannel receiver coils for diffusion MRI acquisition.