Three-dimensional segmented echo planar imaging (3D-EPI) is a promising approach for high-resolution functional magnetic resonance imaging, as it provides an increased signal-to-noise ratio (SNR) at similar temporal resolution to traditional multislice 2D-EPI readouts. Recently, the 3D-EPI technique has become more frequently used and it is important to better understand its implications for fMRI. In this study, the temporal SNR characteristics of 3D-EPI with varying numbers of segments are studied. It is shown that, in humans, the temporal variance increases with the number of segments used to form the EPI acquisition and that for segmented acquisitions, the maximum available temporal SNR is reduced compared to single shot acquisitions. This reduction with increased segmentation is not found in phantom data and thus likely due to physiological processes. When operating in the thermal noise dominated regime, fMRI experiments with a motor task revealed that the 3D variant outperforms the 2D-EPI in terms of temporal SNR and sensitivity to detect activated brain regions. Thus, the theoretical SNR advantage of a segmented 3D-EPI sequence for fMRI only exists in a low SNR situation. However, other advantages of 3D-EPI, such as the application of parallel imaging techniques in two dimensions and the low specific absorption rate requirements, may encourage the use of the 3D-EPI sequence for fMRI in situations with higher SNR.