Continuous wave functional near-infrared spectroscopy (CW-fNIRS) has potential advantages in the detection of cerebral functional activation, such as safety, portability, resistance to electromagnetic noise, time resolution higher than that of functional magnetic resonance imaging (fMRI), spatial resolution higher than that of electroencephalography (EEG), and the lack of need for subject restraint. However, for practical application of the fNIRS technique, a careful study design is required for experiments, practical measurements, and data analysis. Each step should be based on accurate knowledge of both the advantages and drawbacks of the fNIRS technique. This review will describe various signal components in the fNIRS measurement and their appropriate management through critical discussions on the measurement principle and the physiological origin of the signal.