An image-guided surgical system for otologic surgery was developed and clinically evaluated. With reliable hybrid registration, real-time patient movement compensation and virtual intraoperative computed tomography imaging have been originally proposed. In contrast to the commercially available systems that mainly use 2-D images for pointing probes, in this system, the surgical drill position is navigated and displayed in the 3-D space with real-time surface rendering. In a temporal bone model study, the navigation accuracy was 1.12 +/- 0.09 mm with regard to the target registration error. Initial clinical evaluation of the proposed method was performed in five cochlea implantation surgeries. Accurate insertion of the electrodes into the cochlea was achieved, and the facial nerve was protected from injury in all surgeries. The proposed method could be applied to various surgeries for accurate targeting and protection of critical organs.