A computer-implemented method for bit-depth efficient image processing includes a step of communicating at least one non-linear transformation to an image signal processor. Each non-linear transformation is configured to, when applied by the image signal processor to a captured image having sensor signals encoded at a first bit depth, produce a nonlinear image that re-encodes the captured image at a second bit depth that may be less than the first bit depth, while optimizing allocation of bit depth resolution in the nonlinear image for low contour visibility. The method further includes receiving the nonlinear image from the image signal processor, and applying an inverse transformation to transform the nonlinear image to a re-linearized image at a third bit depth that is greater than the second bit depth. The inverse transformation is inverse to the nonlinear transformation used to produce the nonlinear image.