In order to detect the size and shape of defects inside wood, an image reconstruction method based on segmented propagation rays of stress waves is proposed. The method uses sensors to obtain the stress wave velocity data by hanging around the timber equally, visualizes those data, and reconstructs the image of internal defects with the visualized propagation rays. The basis of the algorithm is precisely segmenting the rays to benefit the spatial interpolation. First, a ray segmentation algorithm using the elliptical neighborhood technique is proposed, which can be used to segment the rays and estimate the velocity values of segmented rays by the nearby original rays using elliptical zones. Second, a spatial interpolation algorithm utilizing a segmented ellipse according to the segmented rays is also proposed, which can be used to estimate the velocity value of a grid cell by the segmented ellipses corresponding to the nearby segmented rays. Then, the image of the internal defect inside the wood is reconstructed. Both simulation and experimental data were used to evaluate the proposed method, and the area and shape of the imaging results were analyzed. The comparison results show that the proposed method can produce high quality reconstructions with clear edges and high accuracy.