Scans have shown that the brain can respond to a dummy drug in the same way it reacts to a painkiller.
People feel pain differently
Researchers from Princeton and Michigan Universities exposed volunteers to electric shocks and heat.
Brain scans revealed reduced activity in the pain circuits of the brain after participants were told they had been given an anti-pain cream.
It's believed the study, published in Science, could pave the way for new treatments in pain relief.
Lead researcher Dr Tor Wager said the study confirms that a drug's effect can be enhanced if a patient believes it will work.
"We found a strong correlation between people's belief in the placebo and how well it worked for them."
Controversy has surrounded this claim in the past, with suggestions that patients reports have been biased.
The inability of scientists to track which part of the brain is activated when a person experiences pain has also limited results.
In this study, scientists were able to map the area of the brain affected by pain.
Researchers used functional magnetic resonance imaging (fMRI) on volunteers brains to map changes in blood flow.
When an area of the brain is excited, blood and oxygen flow increases, allowing scientists to see which area of the brain is being used.
When volunteers were exposed to electric shocks and heat, activity increased in the orbitofrontal cortex, an area which is also responsible for anxiety.
After the placebo was given, activity in this area was significantly reduced.
Dr Wager said this is proof that a placebo can alter the experience of pain.
Effect of anticipation
Steve Cohen, a research Psychologist at the Institute of Psychiatry, told BBC News Online that anticipation plays a major role in the way we experience pain.
"Generally an increase in anxiety will result in an increase in pain perception. A previously non-painful experience will become more painful.
"So if you think you have been given something that you think will reduce the pain, then you have less anxiety."
He said while it is more helpful if patients do not have to rely on drugs to achieve pain relief, placebos don't work in everyone.
"We don't know why, although people who are less likely to be affected by placebo are less likely to be affected by a course of drug treatment anyway."