Interpolation of gradation levels of an image without degradation of the quality of the image is disclosed. The image is searched in the vertical direction from an objective pixel (Pt) to be subjected to the gradation level interpolation for a high-level pixel (Pvh) located closest to the objective pixel (Pt), and then searched in the horizontal direction from the objective pixel (Pt) for a high-level pixel (Phh) located closest to the objective pixel (Pt). A comparison is made between the high-level pixels (Pvh, Phh) to determine the distance from the objective pixel (Pt) to one of the high-level pixels which is closer to the objective pixel (Pt) as a high-level distance (Dhigh). Similar operation is performed to extract low-level pixels (Pvl, Phl), and a comparison is made therebetween to determine a low-level distance (Dlow). The gradation level of the objective pixel (Pt) is determined based on the high-level distance (Dhigh) and low-level distance (Dlow).