The key problem of accurate image segmentation and character extraction is to utilize information of both whole image and local sections as much as possible. Idea of drainage area based on whole image information takes account of local information when it is applied on gradient image. Excellent segmentation result and the ability of restraining image noise are obtained when this approach is used in the segmentation of object and background and the overall connectivity of object to be segmented is lead in. Advantages, such as simple principle, connected single pixel edge output, accurate edge orientation and simultaneous output of different signaled areas, are proven. The principle and mathematical description of the watershed algorithm are shown, and the disadvantages and resolving strategy are summarized.