A display device and a method of compensating a luminance of the display device enhance display quality and reducing storage capacity of a memory, the display device including: a display panel including a plurality of pixels arranged in a matrix form; a storage unit storing a gray level compensation value of a reference pixel defined by at least one pixel; a compensation circuit receiving a gray level datum and generating a compensated gray level datum by applying the gray level compensation value; and a data driving circuit receiving the compensated gray level datum to generate a data voltage and outputting the data voltage to the display panel. The display panel includes a first compensation area and a second compensation area. The reference pixel in the first compensation area is defined by one pixel and the reference pixel in the second compensation area is defined by m×n pixels, m and n being natural numbers greater than 1.