How is basic level categorization achieved in the human brain? Behavioral studies showed that categorization performance depends systematically on the amount of morph transformation (e.g. Graf, 2002). These results may be due to time-consuming compensation processes (deformable template matching). If deforming (i.e. spatial) compensation processes are involved, then categorization might not only comprise the ventral visual pathway, as generally assumed, but also the dorsal stream. Objects from 25 common basic level categories were generated by morphing between two category members (using 3ds max). In the categorization task, subjects had to decide as fast as possible whether two sequentially presented objects belonged to the same category. The morph distance between category members was varied (event-related design). In a second task, the same observers perceived intact morphing sequences, scrambled sequences, and static presentations of different morphs (block design). In the categorization task, response latencies increased with increasing morph distance between exemplars. Correspondingly, the BOLD signal increased with increasing morph distance in the lateral occipital complex, the superior parietal and the frontal cortices. Control analyses showed that this pattern of activation cannot be reduced to task difficulty, or increasing shape dissimilarity. In the second task we found parietal activation for the contrast between intact vs. scrambled morphing sequences which was close to the dorsal activation in the categorization task, but not identical. The results suggest that basic level categorization relies on a network of ventral, dorsal and frontal areas. The activation within this network depends systematically on the amount of shape transformation. The dorsal activation seems related to compensation processes in parietal cortex, i.e. spatial (deforming) transformation processes. These findings are in accordance with an alignment approach of categorization.