This work describes a new 3D cone-shape illumination model (CSIM) and a robust background subtraction scheme involving shadow and highlight removal for indoor-environmental surveillance. Foreground objects can be precisely extracted for various post-processing procedures such as recognition. Gaussian mixture model (GMM) is applied to construct a color-based probabilistic background model (CBM) that contains the short-term color-based background model (STCBM) and the long-term color-based background model (LTCBM). STCBM and LTCBM are then proposed to build the gradient-based version of the probabilistic background model (GBM) and the CSIM. In the CSIM, a new dynamic cone-shape boundary in the RGB color space is proposed to distinguish pixels among shadow, highlight and foreground. Furthermore, CBM can be used to determine the threshold values of CSIM. A novel scheme combining the CBM, GBM and CSIM is proposed to determine the background. The effectiveness of the proposed method is demonstrated via experiments in a complex indoor environment.