Targeted prostate biopsy is challenging because no currently established imaging modality is both accurate for prostate cancer diagnosis and cost-effective for real-time procedure guidance. A system that fuses real-time transrectal ultrasound images with previously acquired endorectal coil MRI images for prostate biopsy guidance is presented here. The system uses electromagnetic tracking and intraoperative image registration to superimpose the MRI data on the ultrasound image. Prostate motion is tracked and compensated for without the need for fiducial markers. The accuracy of the system in phantom studies was shown to be 2.4 +/- 1.2 mm. The fusion system has been used in more than 20 patients to guide biopsies with almost no modification of the conventional protocol. Retrospective clinical evaluation suggests that clinically acceptable spatial accuracy can be achieved.