A luminance dependent nonlinear image enhancement algorithm is proposed in this paper. Luma-dependent nonlinear enhancement (LDNE) is a luminance based multi-scale center/surround retinex algorithm, which achieves simultaneous dynamic range compression, color consistency and lightness rendition. Compared to other image enhancement algorithms, LDNE provides better color fidelity, specifies fewer parameters, enhances less noise, prevents the unwanted luminance drop at the uniform luminance areas, keeps the 'bright' background unaffected, and enhances well the 'dark' objects in 'bright' background. To support real time applications, an FPGA based co-processor is designed to perform some of the most computationally intensive operation in LDNE algorithm. Estimation techniques are introduced in the hardware algorithmic designed to achieve faster, simpler and more efficient architecture which is capable of processing more than 21 frames per second.