A unified framework for automatic non-rigid 3D-3D and 3D-2D registration of medical images with static and dynamic deformations is proposed in this paper. The problem of non-rigid image registration is approached as a classical state estimation problem using a generic deformation model for the soft tissue. The registration technique employs a dynamic linear elastic continuum mechanics model of the tissue deformation, which is discretized using the finite element method. In the proposed method, the registration is achieved through a Kalman-like filtering process, which incorporates information from the deformation model and a vector of observation prediction errors computed from an intensity-based similarity/distance metric between images. With this formulation, single and multiple-modality, 3D-3D and 3D-2D image registration problems can all be treated within the same framework. The performance of the proposed registration technique was evaluated in a number of different registration scenarios. First, 3D magnetic resonance (MR) images of uncompressed and compressed breast tissue were co-registered. 3D MR images of the uncompressed breast tissue were also registered to a sequence of simulated 2D interventional MR images of the compressed breast. Finally, the registration algorithm was employed to dynamically track a target sub-volume inside the breast tissue during the process of the biopsy needle insertion based on registering pre-insertion 3D MR images to a sequence of real-time simulated 2D interventional MR images. Registration results indicate that the proposed method can be effectively employed for the registration of medical images in image-guided procedures, such as breast biopsy in which the tissue undergoes static and dynamic deformations.