Multiple sclerosis leads to diffuse damage of the central nervous system, affecting also the normal-appearing white matter. Demyelination and axonal degeneration reduce regional fractional anisotropy in normal-appearing white matter, which can be routinely mapped with diffusion tensor imaging. However, the standard fractional anisotropy metric is also sensitive to physiological variations in orientation dispersion of white matter fibres. This complicates the detection of disease-related damage in large parts of cerebral white matter where microstructure physiologically displays a high degree of fibre dispersion. To resolve this ambiguity, we employed a novel tensor-valued encoding method for diffusion MRI, which yields a microscopic fractional anisotropy metric that is unaffected by regional variations in orientation dispersion. In 26 patients with relapsing-remitting multiple sclerosis, 14 patients with primary-progressive multiple sclerosis and 27 age-matched healthy controls, we compared standard fractional anisotropy mapping with the novel microscopic fractional anisotropy mapping method, focusing on normal-appearing white matter. Mean microscopic fractional anisotropy and standard fractional anisotropy of normal-appearing white matter were significantly reduced in both patient groups relative to healthy controls, but microscopic fractional anisotropy yielded a better reflection of disease-related white-matter alterations. The reduction in mean microscopic fractional anisotropy showed a significant positive linear relationship with physical disability, as reflected by the expanded disability status scale. Mean reduction of microscopic fractional anisotropy in normal-appearing white matter also scaled positively with individual cognitive dysfunction, as measured with the symbol digit modality test. Mean microscopic fractional anisotropy reduction in normal-appearing white matter also showed a positive relationship with total white-matter lesion load as well as lesion load in specific tract systems. None of these relationships between normal-appearing white-matter microstructure and clinical, cognitive or structural measures emerged when using mean fractional anisotropy. Together, the results provide converging evidence that microscopic fractional anisotropy mapping substantially advances the assessment of cerebral white matter in multiple sclerosis by disentangling microstructure damage from variations in physiological fibre orientation dispersion at the stage of data acquisition. Since tensor-valued encoding can be implemented in routine diffusion MRI, microscopic fractional anisotropy mapping bears considerable potential for the future assessment of disease progression in normal-appearing white matter in both relapsing-remitting and progressive forms of multiple sclerosis as well as other white-matter-related brain diseases.