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In this paper, a new noise reduction algorithm is introduced and applied to the problem of denoising hyperspectral imagery. This algorithm resorts to the spectral derivative domain, where the noise level is elevated, and benefits from the dissimilarity of the signal regularity in the spatial and the spectral dimensions of hyperspectral images. The performance of the new algorithm is tested on two different hyperspectral datacubes: an Airborne Visible/Infrared Imaging Spectrometer (AVIRIS) datacube that is acquired in a vegetation-dominated site and a simulated AVIRIS datacube that simulates a geological site. The new algorithm provides signal-to-noise-ratio improvement up to 84.44% and 98.35% in the first and the second datacubes, respectively.