Image segmentation is the process of isolating objects in an input image, that is, partitioning the image into disjoint regions, such that each region is homogeneous with respect to some property, such as gray value or texture. Watershed-based image segmentation has gained much popularity in the field of biomedical image processing and computer vision where large images are not uncommon. Time-critical applications like road traffic monitoring, and steel fissure analysis require fast realization of the segmentation results. The present paper proposes a fast watershed transform based on hillclimbing technique. The complexity of the algorithm has been reduced by doing away with multiplication normally required to form a lower complete image in an intermediate step of the overall segmentation. The reduced complexity makes the algorithm suitable for dedicated hardware implementation. An FPGA-based architecture has been developed to implement the proposed algorithm involving moderate hardware complexity. This architecture enhances the applicability of this algorithm for real-time applications.