In accordance with an embodiment of the invention, an anisotropic denoising method is provided that removes sensor noise from a digital image while retaining edges, lines, and details in the image. In one embodiment, the method removes noise from a pixel of interest based on the detected type of image environment in which the pixel is situated. If the pixel is situated in an edge/line image environment, then denoising of the pixel is increased such that relatively stronger denoising of the pixel occurs along the edge or line feature. If the pixel is situated in a detail image environment, then denoising of the pixel is decreased such that relatively less denoising of the pixel occurs so as to preserve the details in the image. In one embodiment, detection of the type of image environment is accomplished by performing simple arithmetic operations using only pixels in a 9 pixel by 9 pixel matrix of pixels in which the pixel of interest is situated. As a result, improved image environment sensitive noise reduction is achieved that requires a relatively low gate count in hardware implementations.