We investigate the statics and dynamics of spatial phase segregation process of a mixture of fermion atoms in a harmonic trap using the density functional theory. The kinetic energy of the fermion gas is written in terms of the density and its gradients. Several cases have been studied by neglecting the gradient terms (the Thomas-Fermi limit) which are then compared with the Monte-Carlo results using the full gradient corrected kinetic energy. A linear instability analysis has been performed using the random-phase approximation. Near the onset of instability, the fastest unstable mode for spinodal decomposition is found to occur at q = 0. However, in the strong coupling limit, many more modes with q ≈ KF decay with comparable time scales.