A method and system for real time luminance correction and detail enhancement of a video image including the steps of extracting a luminance component from a video image, separating the luminance component into an illumination layer and a scene reflectivity layer, the illumination layer having a dynamic range, compressing the dynamic range of the illumination layer to generate a corrected illumination layer, filtering the reflectivity layer to generate an enhanced reflectivity layer; and combining the corrected illumination layer with the enhanced scene reflectivity layer to generate an enhanced luminance image, is provided. A system for real time luminance correction and detail enhancement of a video image is also provided.