Systematic transrectal ultrasound (TRUS)-guided biopsy is the standard method for a definitive diagnosis of prostate cancer. However, this biopsy approach uses two-dimensional (2D) ultrasound images to guide biopsy and can miss up to 30% of prostate cancers. We are developing a molecular image-directed, three-dimensional (3D) ultrasound imageguided biopsy system for improved detection of prostate cancer. The system consists of a 3D mechanical localization system and software workstation for image segmentation, registration, and biopsy planning. In order to plan biopsy in a 3D prostate, we developed an automatic segmentation method based wavelet transform. In order to incorporate PET/CT images into ultrasound-guided biopsy, we developed image registration methods to fuse TRUS and PET/CT images. The segmentation method was tested in ten patients with a DICE overlap ratio of 92.4% ± 1.1 %. The registration method has been tested in phantoms. The biopsy system was tested in prostate phantoms and 3D ultrasound images were acquired from two human patients. We are integrating the system for PET/CT directed, 3D ultrasound-guided, targeted biopsy in human patients.