In this paper, we propose a novel image enhancement algorithm by improving the standard multiscale retinex (MSR) algorithm. A modified retinex output using a combination of two logarithmic functions enhances the details in highlights as well as the details in shadows. Subband decomposition of the modified retinex output makes the individual gain control of spectral bands possible, so that we can enhance image details according to band characteristics. Due to the effective sub-band based gain control, the final enhanced image can be automatically obtained without a user-assisted “canonical” gain/offset control. Experimental results clearly demonstrate that the proposed algorithm effectively distinguishes the details in both highlights and shadows and greatly enhances the overall contrast while maintaining a natural scene.