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The electrophoretic display (EPD) has become the main stream of the panel used in consumer electronic readers. However, getting more than 16 gray levels on an EPD is still a big challenge. In this paper, we propose an image processing tool that combines contrast enhancement and modified error diffusion halftoning to deal with the problems on the image conversion process. The experimental results show that the processed image has higher contrast for image textures and maintains good visibility after the data are quantized into 16 gray levels.