In this paper, a dynamic stochastic resonance (DSR)-based technique has been proposed for contrast enhancement of dark and low contrast images in discrete wavelet transform (DWT) domain. Traditionally, the performance of a stochastic resonance (SR)-based system is improved by addition of external noise. However, in the proposed DSR-based approach, the internal noise of an image has been utilized for the purpose of contrast enhancement. The degradation due to inadequate illumination is treated as noise, and is used to produce a noise-induced transition of the image from a low-contrast state to a high-contrast state. Stochastic resonance is induced in the approximation and detail coefficients in an iterative fashion, producing an increase in variance and mean of the coefficient distribution. Optimal output response is ensured by selection of optimal of bistable system parameters. An iterative algorithm is followed to achieve target value of performance metrics, such as relative contrast enhancement factor (F), perceptual quality measures (PQM), and color enhancement factor (CEF), at minimum iteration count. When compared with the existing SR-based and non SR-based enhancement techniques in spatial and frequency domains, the proposed technique is found to give noteworthy performance in terms of contrast enhancement, perceptual quality, as well as colorfulness. © 2012 ACM.