We present an MEG source reconstruction method that simultaneously reconstructs source amplitudes and identifies source interactions across the whole brain. In the proposed method, a full multivariate autoregressive (MAR) model formulates directed interactions (i.e., effective connectivity) between sources. The MAR coefficients (the entries of the MAR matrix) are constrained by the prior knowledge of whole-brain anatomical networks inferred from diffusion MRI. Moreover, to increase the accuracy and robustness of our method, we apply an fMRI prior on the spatial activity patterns and a sparse prior on the MAR coefficients. The observation process of MEG data, the source dynamics, and a series of the priors are combined into a Bayesian framework using a state-space representation. The parameters, such as the source amplitudes and the MAR coefficients, are jointly estimated from a variational Bayesian learning algorithm. By formulating the source dynamics in the context of MEG source reconstruction, and unifying the estimations of source amplitudes and interactions, we can identify the effective connectivity without requiring the selection of regions of interest. Our method is quantitatively and qualitatively evaluated on simulated and experimental data, respectively. Compared with non-dynamic methods, in which the interactions are estimated after source reconstruction with no dynamic constraints, the proposed dynamic method improves most of the performance measures in simulations, and provides better physiological interpretation and inter-subject consistency in real data applications. (C) 2014 The Authors. Published by Elsevier Inc.