Low-rank image decomposition has the potential to address a broad range of challenges that routinely occur in clinical practice. Its novelty and utility in the context of atlas-based analysis stems from its ability to handle images containing large pathologies and large deformations. Potential applications include atlas-based tissue segmentation and unbiased atlas building from data containing pathologies. In this paper we present atlas-based tissue segmentation of MRI from patients with large pathologies. Specifically, a healthy brain atlas is registered with the low-rank components from the input MRIs, the low-rank components are then re-computed based on those registrations, and the process is then iteratively repeated. Preliminary evaluations are conducted using the brain tumor segmentation challenge data (BRATS '12).