UPDATE 5/24/2009
Don't miss this new less tedious method for Image Stacking / Averaging in 32 bits.
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If you are photographing a stationary subject with a stationary camera you can reduce grain or high ISO noise by averaging together multiple seemingly identical images.

I set up a still life under relatively low light conditions and photographed it eight times in a row at 1600 ISO with a Nikon D200 mounted on a tripod.

Here is a 100% crop of the 1600 ISO image. It's noisier than I'd like it to be.

I have now taken all 8 images and stacked them up in Photoshop CS2 in layers 0 through 7. Let's see what happens when we average them together.
First I set the opacity of layers 7, 5, 3, and 1 to 50% Next I merge them down in pairs -- 7 to 6, 5 to 4, 3 to 2, and 1 to 0. I now have 4 layers in a stack labelled 6, 4, 2, and 0

Here's what a pair of layers looks like when averaged together. You can already see a noise reduction.
Let's continue, repeating the process.
I'm now setting layers 6 and 2 to 50% and merging down in pairs -- 6 to 4, and 2 to 0. I now have 2 layers in a stack labelled 4 and 0.
Let's repeat the process one final time.
I set layer 4 to 50% and merge it down onto 0.

Look above. Look below. You can really see a difference.

Here's the original noise again -- just for comparison.
You can do grain reduction through image averaging on moving footage as well, just as long as the subject and camera are still. That may not sound useful, but the technique does have its place:
I had occasion to use this technique in the feature film Independence Day. There's a shot of The Empire State Building down at the end of an avenue waiting to explode. The model miniature footage was excessively grainy. I had the compositor replace every frame of the footage with a running average of the previous 20 frames. It made for a great grain removal technique. Once the model exploded, we returned to the grainy element, but it was so mixed with fire and flying debris that the grain wasn't objectionable.
Fun Idea
If you can steady the frames properly, you can use image averaging to get a better look at that flying saucer footage, or you can demosaic the identity- or nudity-obscuring blocky pixel mosaics sometimes placed on running video. The trick is to be able to get the frames to stack up in perfect register, which may not always be possible.
Additional Links
Reindeer graphics Image Averaging
UPDATE 5/8/2009
It occurred to me here [Image Stack Fun - Photoshop Extended] that if you have 32-bit Photoshop you can average a stack of layers in a less tedious way without even needing Photoshop Extended. Sum all the layers using the LINEAR DODGE (ADD) blend mode, then dip into 32-bit mode and curve or exposure them back down out of the stacked, white hot 'blowout' look into something reasonable.

Couldn't you do this same technique of reducing noise by duplicating one image 8x then using each one as a separate layer?
t
I don't think so. The noise has to vary randomly. When you average those random fluctuations you approach the ideal mean from which they deviated.
There are, however other ways of doing the averaging in Photoshop. One popular way involves setting the opacity of a given layer to 1/(N+1) where N = # of layers below the given layer in the stack.
An example of this equation in action:
http://www.cambridgeincolour.com/tutorials/noise-reduction.htm
I enjoyed the photography on your web site, btw.
T,
That's right, it wouldn't work with a single image because the noise pattern would be identical for every image, so you'be in essence be averaging nothing. The point of taking 8 shots is that the noise is more or less random from shot to shot. Therefore, when you average the noise, the noise cancels out vis a vis the true signal from the underlying image detail.
Fascinating technique. I was mulling it over, and in the context of still photography, I'm not sure exactly when it would be preferable over a longer shot at lower ISO. Perhaps if you had no tripod and could rattle off a 3-5fps burst, and didn't mind cropping to compensate for panning/rotation adjustment during the aligning process?
Moreover, I wonder what would happen if you combined a few dozen low ISO photos. Theoretically, you could obtain a perfectly clean image, right?
Yes, the more images, the less noise.
Kenn,
Here's a good example of when this technique might be good: You are in a museum that allows neither flash nor tripod, but does allow photography.
As suggested here:
http://imagingpro.wordpress.com/2008/10/30/a-virtual-tripod-with-photoshop-cs4-extended/
I tried to perform the technique of using the linear dodge (ADD) blending mode (PS CS4) but had a problem. After aligning the stack, I used Image>Mode>32-bit and chose "Don't merge" in the next dialog. However, a subsequent dialog only allows the option of "flatten layers" or "cancel". If I flatten layers, the exposure adjustment just grays out the white areas. I get the same result whether I save the layered file as a tif first, or convert the layers to smart objects, or leave the layers alone after stacking them as NEF files, or convert each file to a tif before stacking.
Any suggestions would be appreciated. Thanks!
Richard:
Hard for me to say without seeing it. I did mine in CS3. Maybe CS4 is different. I'll try it.
In the meantime you can use the NORMAL blend mode and set your image opacities as follows:
Bottom layer 100% (1/1)
above that 50% (1/2)
above that 33% (1/3)
above that 25% (1/4)
above that 20% (1/5)
... etc...
Or you can keep with LINEAR DODGE and keep each layer at 100% but dim each layer by a lot (using curves, for example)
So you might have 10 layers, each of which is curved to 10% of its original brightness
Thanks for the information and great demonstration of how you can reduce noise by averaging. I wonder if you can possibly apply this concept by using multiple copies of the same image and then (if necessary) just shifting each slightly to approximate the pattern in separate exposures?
Brad