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This paper presents an algorithm for speckle reduction and contrast enhancement of echocardiographic images. Within a framework of multiscale wavelet analysis, the authors apply wavelet shrinkage techniques to eliminate noise while preserving the sharpness of salient features. In addition, nonlinear processing of feature energy is carried out to enhance contrast within local structures and along object boundaries. The authors show that the algorithm is capable of not only reducing speckle, but also enhancing features of diagnostic importance, such as myocardial walls in two-dimensional echocardiograms obtained from the parasternal short-axis view. Shrinkage of wavelet coefficients via soft thresholding within finer levels of scale is carried out on coefficients of logarithmically transformed echocardiograms. Enhancement of echocardiographic features is accomplished via nonlinear stretching followed by hard thresholding of wavelet coefficients within selected (midrange) spatial-frequency levels of analysis. The authors formulate the denoising and enhancement problem, introduce a class of dyadic wavelets, and describe their implementation of a dyadic wavelet transform. Their approach for speckle reduction and contrast enhancement was shown to be less affected by pseudo-Gibbs phenomena. The authors show experimentally that this technique produced superior results both qualitatively and quantitatively when compared to results obtained from existing denoising methods alone. A study using a database of clinical echocardiographic images suggests that such denoising and enhancement may improve the overall consistency of expert observers to manually defined borders.