A system and method for analyzing a medical image to determine whether an abnormality is present, for example, in digital mammograms, includes the application of a wavelet expansion to a raw image to obtain subspace images of varying resolution. At least one subspace image is selected that has a resolution commensurate with a desired predetermined detection resolution range. A functional form of a probability distribution function is determined for each selected subspace image, and an optimal statistical normal image region test is determined for each selected subspace image. A threshold level for the probability distribution function is established from the optimal statistical normal image region test for each selected subspace image. A region size comprising at least one sector is defined, and an output image is created that includes a combination of all regions for each selected subspace image. Each region has a first value when the region intensity level is above the threshold and a second value when the region intensity level is below the threshold. This permits the localization of a potential abnormality within the image.