Based on analyzing the drawbacks existing in traditional watershed algorithms for bone removal from CTA (Computed Tomography Angiography, CTA), this paper presents an improved interactive watershed algorithm. The improved watershed algorithm is based on sorting and graded overflow of fast watershed algorithms, and the merging process of catchment basins is intervened by a merging threshold which is given by users so as to take an effect on segmentation results. The algorithm can record such basic information as the labels and ridge points of each basin in graded overflow basin marking, set merging threshold by means of user interaction for controlling merging process effectively, and suppresses over segmentation. At last, the improved algorithm is applied to bone removal from CTA Images, and three-dimensional rendering is taken for CTA Images after bone removal. The experimental results indicate that the improved algorithm prevents over segmentation in watershed transformation effectively and removes bone structure accurately.