We present a novel fuzzy region-based hidden Markov model (frbHMM) for unsupervised partial-volume classification in brain magnetic resonance images (MRIs). The primary contribution is an efficient graphical representation of 3D image data in which irregularly-shaped image regions have memberships to a number of classes rather than one discrete class. Our model groups voxels into regions for efficient processing, but also refines the region boundaries to the voxel level for optimal accuracy. This strategy is most effective in data where partial-volume effects due to resolution-limited image acquisition result in intensity ambiguities. Our frbHMM employs a forward-backward scheme for parameter estimation through iterative computation of region class likelihoods. We validate our proposed method on simulated and clinical brain MRIs of both normal and multiple sclerosis subjects. Quantitative results demonstrate the advantages of our fuzzy model over the discrete approach with significant improvements in classification accuracy (30% reduction in mean square error).