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This paper introduces a novel nonlinear multiscale wavelet diffusion method for ultrasound speckle suppression and edge enhancement. This method is designed to utilize the favorable denoising properties of two frequently used techniques: the sparsity and multiresolution properties of the wavelet, and the iterative edge enhancement feature of nonlinear diffusion. With fully exploited knowledge of speckle image models, the edges of images are detected using normalized wavelet modulus. Relying on this feature, both the envelope-detected speckle image and the log-compressed ultrasonic image can be directly processed by the algorithm without need for additional preprocessing. Speckle is suppressed by employing the iterative multiscale diffusion on the wavelet coefficients. With a tuning diffusion threshold strategy, the proposed method can improve the image quality for both visualization and auto-segmentation applications. We validate our method using synthetic speckle images and real ultrasonic images. Performance improvement over other despeckling filters is quantified in terms of noise suppression and edge preservation indices.