Natural synthesis of real and virtual images is a key technology in mixed reality. For this purpose, we propose an efficient dense disparity estimation algorithm and a synthesis algorithm considering features of stereo images. Dense disparities are estimated hierarchically from the low to high resolution images. In the process, the region-dividing-bidirectional-matching algorithm makes matching process efficient and keeps the reliability of the estimated disparities, and dense disparities are assigned considering edge information. finally, mixed reality stereo images are synthesized by comparing depth data of real and virtual Images. Computer simulation shows that the proposed algorithms estimate very stable disparity vectors with sharp edge and synthesize natural stereo mixed reality images.