All imaging devices need dynamic range correction between source and output display. Conventional techniques such as gamma correction may cause degradation of image quality and produce unnatural images. Backlight compensation is done either manually or automatically to correct the exposure of subjects that are in front of a bright light source. Backlight compensation may also cause degradation of image quality and produce unnatural images. Our shadow/highlight compensation automatically calculates a different curve transformation based on an analysis of the scene content while preserving local contrast in each image pixels. Contrast and detail is preserved both in dark and bright areas. The true color is preserved and the dynamic range also is extended. The shadow/highlight compensation is a great new feature that offers the correction of the images in over- and under ex-posed areas. The shadow/highlight compensation is truly amazing and incredibly helpful for the images in shadows, highlight and backlight condition without the WDR function using frame memory.