This paper addresses the problem of both segmenting and reconstructing a no
isy signal or image. The work is motivated by Image problems arising in cer
tain scientific applications, such as medical imaging. Two objectives for a
segmentation and denoising algorithm are laid out: it should be computatio
nally efficient and capable of generating statistics for the errors in the
reconstruction and estimates of the boundary locations. The starting point
for the development of a suitable algorithm is a variational approach to se
gmentation [1]. This paper then develops a precise statistical interpretati
on of a one-dimensional (1-D) version of this variational approach to segme
ntation. The 1-D algorithm that arises as a result of this analysis is comp
utationally efficient and capable of generating error statistics. A straigh
tforward extension of this algorithm to two dimensions would incorporate re
cursive procedures for computing estimates df inhomogeneous Gaussian Markov
random fields. Such procedures require an unacceptably large number of ope
rations. To meet the objective of developing a computationally efficient al
gorithm, the use of recently developed multiscale statistical methods is in
vestigated. This results in the development of an algorithm for segmenting
and denoising which is not only computationally efficient but also capable
of generating error statistics, as desired.