Recent advances in total variation (TV) technology enable accurate CT image reconstruction from highly under-sampled and noisy projection data. The standard iterative reconstruction algorithms, which work well in conventional CT imaging, fail to perform as expected in cone beam CT (CBCT) applications, wherein the non-ideal physics issues, including scatter and beam hardening, are more severe. These physics issues result in large areas of shading artifacts and cause deterioration to the piecewise constant property assumed in reconstructed images. To overcome this obstacle, we incorporate a shading correction scheme into low-dose CBCT reconstruction and propose a clinically acceptable and stable three-dimensional iterative reconstruction method that is referred to as the shading correction assisted iterative reconstruction. In the proposed method, we modify the TV regularization term by adding a shading compensation image to the reconstructed image to compensate for the shading artifacts while leaving the data fidelity term intact. This compensation image is generated empirically, using image segmentation and low-pass filtering, and updated in the iterative process whenever necessary. When the compensation image is determined, the objective function is minimized using the fast iterative shrinkage-thresholding algorithm accelerated on a graphic processing unit. The proposed method is evaluated using CBCT projection data of the Catphan© 600 phantom and two pelvis patients. Compared with the iterative reconstruction without shading correction, the proposed method reduces the overall CT number error from around 200 HU to be around 25 HU and increases the spatial uniformity by a factor of 20 percent, given the same number of sparsely sampled projections. A clinically acceptable and stable iterative reconstruction algorithm for CBCT is proposed in this paper. Differing from the existing algorithms, this algorithm incorporates a shading correction scheme into the low-dose CBCT reconstruction and achieves more stable optimization path and more clinically acceptable reconstructed image. The method proposed by us does not rely on prior information and thus is practically attractive to the applications of low-dose CBCT imaging in the clinic.