Instead of directly utilizing an observed image including some outliers, noise or intensity inhomogeneity, the use of its ideal value (e.g. noise-free image) has a favorable impact on clustering. Hence, the accurate estimation of the residual (e.g. unknown noise) between the observed image and its ideal value is an important task. To do so, we propose an ℓ0 regularization-based Fuzzy C-Means (FCM) algorithm incorporating a morphological reconstruction operation and a tight wavelet frame transform. To achieve a sound trade-off between detail preservation and noise suppression, morphological reconstruction is used to filter an observed image. By combining the observed and filtered images, a weighted sum image is generated. Since a tight wavelet frame system has sparse representations of an image, it is employed to decompose the weighted sum image, thus forming its corresponding feature set. Taking it as data for clustering, we present an improved FCM algorithm by imposing an ℓ0 regularization term on the residual between the feature set and its ideal value, which implies that the favorable estimation of the residual is obtained and the ideal value participates in clustering. Spatial information is also introduced into clustering since it is naturally encountered in image segmentation. Furthermore, it makes the estimation of the residual more reliable. To further enhance the segmentation effects of the improved FCM algorithm, we also employ the morphological reconstruction to smoothen the labels generated by clustering. Finally, based on the prototypes and smoothed labels, the segmented image is reconstructed by using a tight wavelet frame reconstruction operation. Experimental results reported for synthetic, medical, and color images show that the proposed algorithm is effective and efficient, and outperforms other algorithms.