We investigated nonrigid co-registration of PET and MR breast images to improve diagnostic specificity in difficult-to-interpret mammograms, and ultimately to avoid biopsy. A deformable breast model based on a finite-element method (FEM) was employed. The FEM "loads" were taken as the observed intermodal displacements of several fiducial skin markers placed on the breast and visible in PET and MRI. The analogy between orthogonal components of the displacement field and the temperature differences in a steady-state heat transfer (SSHT) in solids was adopted. The model allows estimation of the intermodal breast deformation for every location within the breast. To test our model, an elastic breast phantom with simulated internal "lesions" and external markers was imaged with PET and MRI. We estimated fiducial- and target-registration errors vs. number and location of the fiducials. We established that SSHT approach using external fiducial markers is accurate to within ∼5 mm.