Diffusion tensor imaging (DTI) has been extensively used to map changes in brain tissue related to neurological disorders. Among the most widespread DTI findings are increased mean diffusivity and decreased fractional anisotropy of white matter tissue in neurodegenerative diseases. We show that unincorporated anisotropic free water in perivascular space (PVS) significantly, and systematically, biases DTI measures, casting new light on the biological validity of many previously reported findings. Despite the challenge this poses for interpreting these past results, our findings suggest a new opportunity for incorporating the PVS contribution into diffusion MRI metrics of tissue changes, ultimately strengthening the clinical and scientific value of diffusion MRI.