Abstract: This paper present a new nonlinear algorithm for speckle reduction and contrast enhancement of ultrasound image based on wavelet. Speckle is multiplicative noise and the main reason to cause ultrasonic image degenerate. We adopt Jain's speckle noise model to carry out our scheme. Shrinkage of wavelet coefficients via soft threholding within finer levels of scale is carried out on coefficients of logarithmically transformed ultrasonic image. Enhancement of image features is accomplished via nonlinear stretching according to GAG feature curve followed by hard thresholding of wavelet coefficients within midrange levels of scales. A spatially weighted averaging operation is done to smooth wavelet approximation coefficients at first level in order to avoid effect of pulse energy. The results of our some experiments show that this algorithm produced superior results of denoising and enhancement at the same time when compared to results obtained from existing denoising methods alone.