A method and apparatus for identifying and compensating for the effects of defective pixels in high resolution digital cameras having image processing apparatus. The apparatus includes a storage system for storing data corresponding to either a dark current reference image and a white reference image and at least one actual image captured by a pixel array, and at least one processor coupled to the storage system for compensating the data corresponding to the actual image based upon the stored data. The method includes capturing and storing both dark and white reference images as well as capturing and storing actual images, identifying pixels that are affected by dark current or are defective pixels, reading data corresponding to pixels of an actual image affected by dark current or that are defective from the storage system and compensating the affected pixels.