An image processing system and demosaicing method are provided to calculate estimated missing color sensor values in an image using a linear prediction from the raw color sensor value at the current pixel location. The raw image is divided into regions of sensor values, and the linear relations between color planes for each region are determined by a regression method that calculates the degree to which different color planes co-vary within each region The missing color sensor values per region are calculated as a scaled and shifted version of the raw color sensor values using linear regression coefficients determined from the local linear regression process.