We are developing a method using nonrigid co-registration of PET and MR breast images as a way to improve diagnostic specificity in difficult-to-interpret mammograms, and ultimately to avoid biopsy. A deformable breast model based on a finite-element method (FEM) has been employed. The EEM loads are taken as the observed intermodality displacements of several fiducial skin markers placed on the breast and visible in PET and MRI. The analogy between orthogonal components of the displacement field and the temperature differences in a steady-state heat transfer (SSHT) in solids has been adopted. The model allows estimation, throughout the breast, of the intermodality displacement field. To test our model, an elastic breast phantom with simulated internal lesions and external markers was imaged with PET and MRI. We have estimated fiducial- and target-registration errors vs. number and location of fiducials, and have shown that the SSHT approach using external fiducial markers is accurate to within ∼5 mm