We present a 3D non-rigid registration algorithm for the potential use in combining PET/CT and transrectal ultrasound (TRUS) images for targeted prostate biopsy. Our registration is a hybrid approach that simultaneously optimizes the similarities from point-based registration and volume matching methods. The 3D registration is obtained by minimizing the distances of corresponding points at the surface and within the prostate and by maximizing the overlap ratio of the bladder neck on both images. The hybrid approach not only capture deformation at the prostate surface and internal landmarks but also the deformation at the bladder neck regions. The registration uses a soft assignment and deterministic annealing process. The correspondences are iteratively established in a fuzzy-to-deterministic approach. B-splines are used to generate a smooth non-rigid spatial transformation. In this study, we tested our registration with pre- and post- biopsy TRUS images of the same patients. Registration accuracy is evaluated using manual defined anatomic landmarks, i.e. calcification. The root-mean-squared (RMS) of the difference image between the reference and floating images was decreased by 62.6±9.1% after registration. The mean target registration error (TRE) was 0.88±0.16 mm, i.e. less than 3 voxels with a voxel size of 0.38×0.38×0.38 mm3 for all five patients. The experimental results demonstrate the robustness and accuracy of the 3D non-rigid registration algorithm.