Tumor functional volume (FV) and its mean activity concentration (mAC) are the quantities derived from positron emission tomography (PET). These quantities are used for estimating radiation dose for a therapy, evaluating the progression of a disease and also use it as a prognostic indicator for predicting outcome. PET images have low resolution, high noise and affected by partial volume effect (PVE). Manually segmenting each tumor is very cumbersome and very hard to reproduce. To solve the above problem I developed an algorithm, called iterative deconvolution thresholding segmentation (IDTS) algorithm; the algorithm segment the tumor, measures the FV, correct for the PVE and calculates mAC. The algorithm corrects for the PVE without the need to estimate camera’s point spread function (PSF); also does not require optimizing for a specific camera. My algorithm was tested in physical phantom studies, where hollow spheres (0.5-16 ml) were used to represent tumors with a homogeneous activity distribution. It was also tested on irregular shaped tumors with a heterogeneous activity profile which were acquired using physical and simulated phantom. The physical phantom studies were performed with different signal to background ratios (SBR) and with different acquisition times (1-5 min). The algorithm was applied on ten clinical data where the results were compared with manual segmentation and fixed percentage thresholding method called T50 and T60 in which 50% and 60% of the maximum intensity respectively is used as threshold. The average error in FV and mAC calculation was 30% and -35% for 0.5 ml tumor. The average error FV and mAC calculation were ~5% for 16 ml tumor. The overall FV error was ~10% for heterogeneous tumors in physical and simulated phantom data. The FV and mAC error for clinical image compared to manual segmentation was around -17% and 15% respectively. In summary my algorithm has potential to be applied on data acquired from different cameras as its not dependent on knowing the camera’s PSF. The algorithm can also improve dose estimation and treatment planning.