In this paper, a novel algorithm based on 2D histogram Grouping for color Image Segmentation is proposed. The proposed method uses intermediate features of maximum overlap wavelet transform (IMOWT) as a pre-processing step. The coefficients derived from IMOWT are subjected to 2D histogram Grouping. This method is simple, fast and unsupervised. 2D histograms are used to obtain Grouping of color image. This Grouping output gives three segmentation maps which are fused together to get the final segmented output. This method produces good segmentation results when compared to the direct application of 2D Histogram Grouping. IMOWT is the efficient transform in which a set of wavelet features of the same size of various levels of resolutions and different local window sizes for different levels are used. IMOWT is efficient because of its time effectiveness, flexibility and translation invariance which are useful for good segmentation results.