In this work the authors compare the accuracy of two-dimensional (2D) and three-dimensional (3D) implementations of a computer-aided image segmentation method to that of physician observers (using manual outlining) for volume measurements of liver tumors visualized with diagnostic contrast-enhanced and PET/CT-based non-contrast-enhanced (PET-CT) CT scans. The method assessed is a hybridization of the watershed method using observer-set markers with a gradient vector flow approach. This method is known as the iterative watershed segmentation (IWS) method. Initial assessments are performed using software phantoms that model a range of tumor shapes, noise levels, and noise qualities. IWS is then applied to CT image sets of patients with identified hepatic tumors and compared to the physicians' manual outlines on the same tumors. The repeatability of the physicians' measurements is also assessed. IWS utilizes multiple levels of segmentation performed with the use of "fuzzy regions" that could be considered part of a selected tumor. In phantom studies, the outermost volume outline for level 1 (called level 1_1 consisting of inner region plus fuzzy region) was generally the most accurate. For in vivo studies, the level 1_1 and the second outermost outline for level 2 (called level 2_2 consisting of inner region plus two fuzzy regions) typically had the smallest percent error values when compared to physician observer volume estimates. Our data indicate that allowing the operator to choose the "best result" level iteration outline from all generated outlines would likely give the more accurate volume for a given tumor rather than automatically choosing a particular level iteration outline. The preliminary in vivo results indicate that 2D-IWS is likely to be more accurate than 3D-IWS in relation to the observer volume estimates.