A spatial noise shaping (SNS) method based on human visual sensitivity is presented. The method exploits the capability of frequency domain linear prediction for spatial envelope retrieval. It effectively shapes (or hides) the noise of an image in areas which are not sensitive to human vision so that the resulting image is more pleasant to human eyes. The noise comes from the processing of the image, and it can be either separable like the additive noise pattern in image watermarking or nonseparable like the quantization noise in image coding. An application of the algorithm is demonstrated in the paper by using it to enhance image coders. Images decoded from the SNS incorporated coders have superior perceived quality than those without using SNS.