Quantification of nicotinamide adenine dinucleotide (NADH) changes during functional brain activation and pathological conditions provides critical insight into brain metabolism. Of the different imaging modalities, two-photon laser scanning microscopy (TPLSM) is becoming an important tool for cellular-resolution measurements of NADH changes associated with cellular metabolic changes. However, NADH fluorescence emission is strongly absorbed by hemoglobin. As a result, in vivo measurements are significantly affected by the hemodynamics associated with physiological and pathophysiological manipulations. We model NADH fluorescence excitation and emission in TPLSM imaging based on precise maps of cerebral microvasculature. The effects of hemoglobin optical absorption and optical scattering from red blood cells, changes in blood volume and hemoglobin oxygen saturation, vessel size, and location with respect to imaging location are explored. A simple technique for correcting the measured NADH fluorescence intensity changes is provided, with the utilization of a parallel measurement of a physiologically inert fluorophore. The model is applied to TPLSM measurements of NADH fluorescence intensity changes in rat somatosensory cortex during mild hypoxia and hyperoxia. The general approach of the correction algorithm can be extended to other TPLSM measurements, where changes in the optical properties of the tissue confound physiological measurements, such as the detection of calcium dynamics.