A method is proposed for reducing the visibility of ldquocontour artifacts,rdquo i.e., false contours resulting from color quantization in digital images. The method performs a multiscale analysis on the neighborhood of each pixel, determines the presence and scale of contour artifacts, and probabilistically dithers (perturbs) the color of the pixel. The overall effect is to ldquobreak downrdquo the false contours, making them less visible. The proposed method may be used to reduce contour artifacts at the same bit depth as the input image or at higher bit depths. The contour artifact detection mechanism ensures that artifact-free regions remain unaffected during the process.