Both total variation (TV) and Mumford-Shah (MS) functional are broadly used for regularization of various ill-posed problems in the field of imaging and image processing. Incorporating MS functional with TV, we propose a new functional, named as Mumford-Shah-TV (MSTV), for the object image of piecewise constant. Both the image and its edge can be reconstructed by MSTV regularization method. We study the regularizing properties of MSTV functional and present an Ambrosio-Tortorelli type approximation for it in the sense of Γ-convergence. We apply MSTV regularization method to the interior problem of X-ray CT and develop an algorithm based on split Bregman and OS-SART iterations. Numerical and physical experiments demonstrate that high-quality image and its edge within the ROI can be reconstructed using the regularization method and algorithm we proposed.