In this paper a hierarchical stereo matching algorithm to obtain the disparity in wavelet transformed domain by using locally adaptive window and weights is proposed. The pyramidal structure obtained by wavelet transform is used to solve the loss of information which the conventional Gaussian or Laplacian pyramid have. The wavelet transformed images are decomposed into the blurred image the horizontal edges the vertical edges and the diagonal edges. The similarity between each wavelet channel of left and right image determines the relative importance of each primitive and make the algorithm perform the area-based and feature-based matching adaptively. The wavelet transform can extract the features that have the dense resolution as well as can avoid the duplication or loss of information. Meanwhile the variable window that needs to obtain precise and stable estimation of correspondense is decided adaptively from the disparities estimated in coarse resolution and LL(low-low) channel of wavelet transformed stereo image. Also a new relaxation algorithm that can reduce the false match without the blurring of the disparity edge is proposed. The experimental results for various images show that the proposed algorithm has good perfpormance even if the images used in experiments have the unfavorable conditions.