Imaging techniques such as fMRI seek to estimate neural signals in local brain regions through measurements of hemodynamic activity. However, hemodynamic activity is accompanied by large vascular fluctuations of unclear significance. To characterize these fluctuations and their impact on estimates of neural signals, we used optical imaging in visual cortex of awake mice. We found that hemodynamic activity can be expressed as the sum of two components, one local and one global. The local component reflected presumed neural signals driven by visual stimuli in the appropriate retinotopic region. The global component constituted large fluctuations shared by larger cortical regions, which extend beyond visual cortex. These fluctuations varied from trial to trial, but they did not constitute noise: they correlated with pupil diameter, suggesting that they reflect variations in arousal or alertness. Distinguishing local and global contributions to hemodynamic activity may help understand neurovascular coupling and interpret measurements of hemodynamic responses.