Objectives To evaluate the optic nerve and CSF in the optic nerve sheath as imaging markers of dysthyroid optic neuropathy (DON). Methods In this single-centre retrospective study, orbital images of 30 consecutive participants (54 orbits) with DON, 30 patients (60 orbits) with thyroid-associated ophthalmopathy (TAO) without DON, and 19 healthy controls (HCs; 38 orbits) were analysed. The diameter and cross-sectional area of the optic nerve and its sheath, water fraction of the optic nerve, and volume of the fluid in the optic nerve sheath were measured and compared. The associations between MR parameters and clinical measures were assessed using correlation analysis. Results The diameter and water fraction of the optic nerve (3 mm and 6 mm behind the eyeball), optic nerve subarachnoid space (ONSS) (3 mm and 6 mm behind the eyeball), and subarachnoid fluid volume in the optic nerve sheath were significantly greater in the DON group than in the TAO group (p < 0.01) or HC group (p < 0.01). ROC analysis showed that ONSS 3 mm behind the eyeball (ONSS3) was a robust predictor of DON (AUC = 0.957, sensitivity = 0.907, specificity = 0.9). Water fraction of the optic nerve 3 mm behind the eyeball (water fraction3) had the best specificity (0.967). Water fraction3, fluid volume in the optic nerve sheath, and optic nerve diameter (3 mm behind the eyeball) were correlated with clinical measures (i.e. clinical activity score, mean defect, and pattern standard deviation). Conclusions Increased water fraction of the optic nerve and ONSS3 are promising and easily accessible radiological markers for diagnosing DON.