Electrowetting　electronic　paper　shows　insufficient　gray　scale　and　poor　image　contrast　due　to　ink　reflow　phenomenon.　In　this　paper,　an　error　diffusion　algorithm　based　on　pixel　neighborhood　gray　information　was　proposed　for　electrowetting　electronic　paper　display.　Firstly,　the　image　contrast　was　improved　by　histogram　equalization　processing.　Then,　based　on　the　classical　error　diffusion　algorithm,　the　original　fixed　threshold　was　adjusted　according　to　the　current　pixel’s　neighborhood　average　gray　level,　the　difference　and　similarity　between　pixel　and　neighborhood　pixel.　The　experimental　results　show　that　the　histogram　equalization　process　plus　the　improved　algorithm　compared　with　the　traditional　error　diffusion　algorithm,　the　PSNR,　SSIM　and　UIQI　values　of　image　evaluation　index　are　respectively　improved　by　about　0.3-0.5　dB,　0.03-0.04　and　0.02-0.04.　Eventually,　the　quality　of　the　image　displayed　on　the　electrowetting　electronic　paper　is　mostly　improved,　the　level　of　detail　is　richer,　and　the　edges　of　the　image　are　preserved.　©　2012　Editorial　Office　of　Chinese　Journal　of　Liquid　Crystals　and　Displays.