Tendons are tough fibrous tissues that facilitate skeletal movement by transferring muscular force to bone. Studies into the effects of mechanical stress on tendons have shown that these can either accelerate healing or cause tendon injuries depending on the load applied. It is known that local strain magnitude and direction play an important role in tendon remodelling and also failure, and different techniques to study strain distribution have been proposed. Image registration and processing techniques are among the recently employed methods. In this study, a novel three-dimensional image processing technique using the Sheffield Image Registration Toolkit is introduced to study local strain and displacement distribution in tendon. The results show that the local normal strain values in the loading axis are smaller than the global applied load, and fibre sliding was detected as a dominant mechanism for transferring the applied load within tendon. However, results from different samples suggest three distinct modes of deformation during loading, as some show only parallel sliding of fibres in respect to the loading axis, whereas others are twisted or deflected in directions transverse to the loading axis. The proposed 3D image registration method is essential for analysing this out-of-plane movement, which cannot be detected using a standard 2D method.