We present a surgical guidance system that incorporates preoperative image information (e.g. MRI or CT) and intraoperative ultrasound imaging to detect brain tissue deformation during image guided neurosurgery (IGNS). Many interactive IGNS implementations involve using pre-operative image information (e.g. MRI or CT) as a guide to the surgeons throughout the procedure. Tissue movement during a procedure can be a significant source of error in these systems. By incorporating intraoperative imaging, the target volume can be scanned at any time, and mapped into the pre-operative image space. The surgeon can use this information to assess the accuracy of the guidance system at any time during the procedure. In addition, the system can be used to provide updated information of the progress of the procedure (e.g. extent of lesion removal). Validation results using a deformable multimodality imaging phantom are presented as well as initial examples of the system used in surgery.