The principal problem for any noise reduction technique applied to luminance noise is that it changes the information which determines the sharpness of an image. Some softening of edges and detail is therefore unavoidable, but techniques are available which minimize the degradation. When carefully undertaken, the reduction of luminance noise can enhance an image considerably.
Convert the image to Lab colour from within the Mode menu in Photoshop, and create a duplicate layer so that the original image remains unaltered. Then select the background copy layer. Three channels should now be visible under the channels tab. Select the lightness channel as this is the only one relevant to luminance noise. The other two channels, "a" and "b" affect only colour noise which is addressed in another article. Now copy the lightness channel (by dragging it to the copy icon) so that a lightness copy layer is obtained.
The next stage is to create a selection of the smooth areas which contain most of the luminance noise, and separate them from the edges in the image which must not be blurred in any way. One way to achieve this is to select the alpha channel (the new lightness copy channel) and apply the glowing edges filter (found in the Stylize section of the Photoshop filter menu). This filter highlights edges in the image in white, while smooth areas are left black. There are three controls available for this filter. Edge width controls the width of the white areas selected. Images featuring fine detail should have a lower edge-width setting - values of 5 or 6 are a good starting point but there must be an element of experimentation to achieve optimum results for a particular image. The edge brightness control sets the level at which edges are selected. If the level is set too high, noise elements in smooth areas may become incorporated within the selection. Again, try 5 or 6 as a starting point.The smoothness control is intended to maintain the important areas sufficiently light without selecting noise from within smooth areas. Try 3 as an initial setting. At this stage we have a dark alpha channel with white edges. The selection can be refined further by various techniques such as applying a minimum Gaussian blur to the image. Once satisfied, invert the channel image by using Image/Adjust/Invert. Depressing Ctrl and clicking on the name of the alpha channel now selects the light areas and excludes the black ones.
Having selected the relevant areas of the channel it is now possible to apply the Smart Blur filter (from within the Stylize section of the filter menu). The quality setting should be maintained at the high level, but the radius setting must be kept very low. Any setting above about 2 may result in unacceptable blurring. The threshold setting should also be used carefully with values being kept down to 10 or less.
The selection can finally be cancelled. Then go to the Layers palette and set an opacity for the upper layer on which the work has been done. Move the slider around to find the most acceptable result as the original and new layers are merged together, and then flatten the image and return it to RGB colour from within the Mode menu.