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An optimized brightness-compensated contrast enhancement (BCCE) algorithm for transmissive liquid crystal displays (LCDs) is proposed in this paper. We first develop a global contrast enhancement scheme to compensate for the reduced brightness when the backlight of an LCD device is dimmed for power reduction. We also derive a distortion model to describe the information loss due to the brightness compensation. Then, we formulate an objective function that consists of the contrast enhancement term and the distortion term. By minimizing the objective function, we maximize the backlight-scaled image contrast, subject to the constraint on the distortion. Simulation results show that the proposed BCCE algorithm provides high-quality images, even when the backlight intensity is reduced by up to 50-70% to save power.