An image dynamic range compression with local contrast enhancement method for an image processing device is provided. The method includes the following steps. A plurality of input pixels of an image including a first input pixel are received, and an input luminance pixel value of each of the input pixels as well as a darkness intensity level of the image are obtained. A filter result of the first input pixel is obtained according to filter computation on the input luminance pixel values; an image-related parameter is obtained according to image-related computation on the darkness intensity level. The image-related parameter, the filter result of the first input pixel, and the input luminance pixel value of the first input pixel are transformed into an output luminance pixel value of the first input pixel according to a non-linear intensity transfer function and a dynamic range compression with local contrast enhancement algorithm.