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Power dissipation and robustness to process variation have conflicting design requirements. Scaling of voltage is associated with larger variations, while Vdd upscaling or transistor up-sizing for parametric-delay variation tolerance can be detrimental for power dissipation. However, for a class of signal-processing systems, effective tradeoff can be achieved between Vdd scaling, variation tolerance, and ldquooutput quality.rdquo In this paper, we develop a novel low-power variation-tolerant algorithm/architecture for color interpolation that allows a graceful degradation in the peak-signal-to-noise ratio (PSNR) under aggressive voltage scaling as well as extreme process variations. This feature is achieved by exploiting the fact that all computations used in interpolating the pixel values do not equally contribute to PSNR improvement. In the presence of Vdd scaling and process variations, the architecture ensures that only the ldquoless important computationsrdquo are affected by delay failures. We also propose a different sliding-window size than the conventional one to improve interpolation performance by a factor of two with negligible overhead. Simulation results show that, even at a scaled voltage of 77% of nominal value, our design provides reasonable image PSNR with 40% power savings.