The Ambrosio-Tortorelli functional is a phase-field approximation of the Mumford-Shah functional that has been widely used for image segmentation. It has the advantages of being easy to implement, maintaining the segmentation ability, and Γ-converging to the Mumford-Shah functional as the regularization parameter goes to zero. However, it has been observed in actual computation that the segmentation ability of the Ambrosio-Tortorelli functional varies significantly with different values of the parameter and it even fails to Γ-converge to the original functional for some cases. In this paper we present an asymptotic analysis on the gradient flow equation of the Ambrosio-Tortorelli functional and show that the functional can have different segmentation behaviors for small but finite values of the regularization parameter and eventually loses its segmentation ability as the parameter goes to zero when the input image is treatd as a continuous function. This is consistent with the existing observation as well as the numerical examples presented in this work. A selection strategy for the regularization parameter and a scaling procedure for the solution are devised based on the analysis. Numerical results show that they lead to good segmentation of the Ambrosio-Tortorelli functional for real images.