Provided are an apparatus and method for displaying an image in a portable terminal. The apparatus includes a display unit for displaying an image; a display buffer that stores the image to be displayed; a zoom buffer that temporarily stores an enlarged thumbnail to provide a better image quality; a memory that stores an original image of the thumbnail as a compressed image file; an interface unit that upon receiving an image enlargement request while the thumbnail is being displayed on the display unit, enlarges and stores the thumbnail, stored in the display buffer, in the zoom buffer, and sends an image quality improvement request to a decoder that continuously improves the image quality of the enlarged thumbnail stored in the zoom buffer by a predetermined amount.