Patients with early-stage Alzheimer’s disease exhibit perceptual deficits in odour identification, often before the appearance of overt memory loss. This impairment coincides with the initial accumulation of pathological lesions in limbic olfactory brain regions. Although these data imply that odour stimuli may be effectively used as biological probes of limbic dysfunction, the precise neural mechanisms underlying the olfactory deficits in early Alzheimer’s disease remain poorly understood. In the current study, we combined functional magnetic resonance imaging with an olfactory cross-adaptation paradigm to test the hypothesis that perceptual codes of odour quality in posterior piriform cortex are degraded in patients with Alzheimer’s disease. In elderly control subjects, sequential presentation of qualitatively similar (versus qualitatively different) odourant pairs elicited cross-adapting responses in posterior piriform cortex, in accord with the pattern observed in healthy young adults. However, this profile was significantly blunted in patients with Alzheimer’s disease, reflecting a functional disruption of odour quality coding in this olfactory brain area. These results highlight the potential of olfactory functional magnetic resonance imaging as a non-invasive bioassay of limbic functional integrity, and suggest that such an index could possibly aid in the early diagnosis of Alzheimer’s disease. Furthermore, as a putative lesion model of odour quality processing in the human brain, our study suggests a causal role of posterior piriform cortex in differentiating olfactory objects.