A method for performing highlight restoration on a digital image includes comparing the pixels in the image with a saturation level value to identify saturated pixels. A saturation map of saturated pixels is generated. Each selected saturated pixel is identified as a restorable pixel only if at least one color channel of the pixel is unsaturated. For each restorable pixel, a group of the closest unsaturated pixels above, below, to the left, and to the right of the select saturated pixel is identified. A replacement pixel value is generated for each saturated color channel of the restorable pixel, using a combination of the pixel values of the unsaturated color channels of the restorable pixel and the pixel values of the corresponding color channels of the nearby unsaturated pixels.