This paper proposes a new cost function, cut ratio, for segmenting images using graph-based methods. The cut ratio is defined as the ratio of the corresponding sums of two different weights of edges along the cut boundary and models the mean affinity between the segments separated by the boundary per unit boundary length. This new cost function allows the image perimeter to be segmented, guarantees that the segments produced by bipartitioning are connected, and does not introduce a size, shape, smoothness, or boundary-length bias. The latter allows it to produce segmentations where boundaries are aligned with image edges. Furthermore, the cut-ratio cost function allows efficient iterated region-based segmentation as well as pixel-based segmentation. These properties may be useful for some image-segmentation applications. While the problem of finding a minimum ratio cut in an arbitrary graph is NP-hard, one can find a minimum ratio cut in the connected planar graphs that arise during image segmentation in polynomial time. While the cut ratio, alone, is not sufficient as a baseline method for image segmentation, it forms a good basis for an extended method of image segmentation when combined with a small number of standard techniques. We present an implemented algorithm for finding a minimum ratio cut, prove its correctness, discuss its application to image segmentation, and present the results of segmenting a number of medical and natural images using our techniques.