Abstract Background The aim, of the study was to estimate the accuracy of magnetic resonance imaging (MRI) in assessing residual disease in breast cancer patients receiving neoadjuvant chemotherapy (NAC) and to identify the clinico-pathological factors that affect the diagnostic accuracy of breast MRI to determine residual tumour size following NAC. Patients and methods 91 breast cancer patients undergoing NAC (92 breast lesions) were included in the study. Breast MRI was performed at baseline and after completion of NAC. Treatment response was evaluated by MRI and histopathological examination to investigate the ability of MRI to predict tumour response. Residual tumour size was measured on post-treatment MRI and compared with pathology in 89 lesions. Clinicopathological factors were analyzed to compare MRI-pathologic size differences. Results The overall sensitivity, specificity, positive predictive value, negative predictive value, and accuracy for diagnosing invasive residual disease by using MRI were 75.00%, 78.57%, 88.89%, 57.89%, and 76.09% respectively. The Pearson’s correlation coefficient (r) between tumour sizes determined by MRI and pathology was r = 0.648 (p < 0.001). The size discrepancy was significantly lower in cancers with initial MRI size ≤ 5 cm (p = 0.050), in cancers with high tumour grade (p < 0.001), and in patients with hormonal receptor-negative cancer (p = 0.033). Conclusions MRI is an accurate tool for evaluating tumour response after NAC. The accuracy of MRI in estimating residual tumour size varies with the baseline MRI tumour size, the tumour grade and the hormonal receptor status.