A system and method for non-rigid image registration using distance functions includes portions for receiving a source shape into an image space, integrating a global linear registration model with local deformations to assess the source shape, optimizing a functional defined on a parameter or feature space where the functional quantifies the similarity between the source shape and a target shape in terms of distance functions, creating an augmented registration space including a plurality of target shape clones coherently positioned in the image space, tracking moving interfaces between the source shape and the target shapes and clones through a level set method, and registering the source shape by seeking mutual correspondences between the source shape, the target shape and the target shape clones.