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Noninvasive measurement of hemoglobin oxygen saturation ( SO 2 ) in retinal vessels is based on spectrophotometry and spectral absorption characteristics of tissue. Retinal images at 570 and 600 nm are simultaneously captured by dual-wavelength retinal oximetry based on fundus camera. SO 2 is finally measured after vessel segmentation, image registration, and calculation of optical density ratio of two images. However, image noise can dramatically affect subsequent image processing and SO 2 calculation accuracy. The aforementioned problem remains to be addressed. The purpose of this study was to improve image quality and SO 2 calculation accuracy by noise analysis and denoising algorithm for dual-wavelength images. First, noise parameters were estimated by mixed Poisson–Gaussian (MPG) noise model. Second, an MPG denoising algorithm which we called variance stabilizing transform (VST) + dual-domain image denoising (DDID) was proposed based on VST and improved dual-domain filter. The results show that VST + DDID is able to effectively remove MPG noise and preserve image edge details. VST + DDID is better than VST + block-matching and three-dimensional filtering, especially in preserving low-contrast details. The following simulation and analysis indicate that MPG noise in the retinal images can lead to erroneously low measurement for SO 2 , and the denoised images can provide more accurate grayscale values for retinal oximetry.