The wide dynamic range and severely attenuated contrast in mediastinal area appearing in typical chest radiographs have often caused difficulties in effective visualization and diagnosis of lung diseases. This paper proposes a new adaptive image enhancement technique which potentially solves this problem and there by improves observer performance through image processing. In the proposed method image processing is applied to the chest radiograph with different processing parameters for the lung field and mediastinum adaptively since there are much differences in anatomical and imaging properties between these two regions. To achieve this the chest radiograph is divided into the lung and mediastinum by gray level thresholding using the cumulative histogram and the dynamic range compression and local contrast enhancement are carried out selectively in the mediastinal region. Thereafter a gray scale transformation is performed considering the JND(just noticeable difference) characteristic for effective image displa. The processed images showed apparenty improved contrast in mediastinum and maintained moderate brightness in the lung field. No artifact could be observed. In the visibility evaluation experiment with 5 radiologists the processed images with better visibility was observed for the 5 important anatomical structures in the thorax.