Magnetization transfer (MT) imaging with a rapid gradient-echo sequence and pulsed saturation provides an efficient means of acquiring high resolution three-dimensional data in vivo. This paper presents a derivation of the theoretical steady-state signal equation for this sequence based on the two-site coupled Bloch equations. Numerical simulations are used to validate the derived expression and experiments are performed on an agar gel model and normal brain. Experimental agar data indicate that direct saturation of the liquid component can be a major source of signal attenuation whereas MT normally dominates in brain tissue. The signal equation presented here establishes the necessary theory for sequence design and optimization and provides insight into model parameters and experimental results.