Acupuncture-induced sensations have historically been associated with clinical efficacy. These sensations are atypical, arising from sub-dermal receptors, and their neural encoding is not well known. In this fMRI study, subjects were stimulated at acupoint PC-6, while rating sensation with a custom-built, MR-compatible potentiometer. Separate runs included real (ACUP) and sham (SHAM) acupuncture, the latter characterized by non-insertive, cutaneous stimulation. FMRI data analysis was guided by the on-line rating timeseries, thereby localizing brain correlates of acupuncture sensation. Sensation ratings correlated with stimulation more (p<0.001) for SHAM (r=0.63) than for ACUP (r=0.32). ACUP induced stronger and more varied sensations with significant persistence into no-stimulation blocks, leading to more run-time spent rating low and moderate sensations compared to SHAM. ACUP sensation correlated with activation in regions associated with sensorimotor (SII, insula) and cognitive (dorsomedial prefrontal cortex (dmPFC)) processing, and deactivation in default-mode network (DMN) regions (posterior cingulate, precuneus). Compared to SHAM, ACUP yielded greater activity in both anterior and posterior dmPFC and dlPFC. In contrast, SHAM produced greater activation in sensorimotor (SI, SII, insula) and greater deactivation in DMN regions. Thus, brain encoding of ACUP sensation (more persistent and varied, leading to increased cognitive load) demonstrated greater activity in both cognitive/evaluative (posterior dmPFC) and emotional/interoceptive (anterior dmPFC) cortical regions. Increased cognitive load and dmPFC activity may be a salient component of acupuncture analgesia--sensations focus attention and accentuate bodily awareness, contributing to enhanced top-down modulation of any nociceptive afference and central pain networks. Hence, acupuncture may function as a somatosensory-guided mind-body therapy.