Dynamic backlight plays an important role in reducing power consumption of liquid crystal displays. Considering it is more important to make sure a high quality of the displayed image when reducing power consumption, a new algorithm was proposed for local backlight dimming of liquid crystal displays. According to the algorithm, PSNR (the peak signal-to-noise ratio) =30 was the lowest standard to guarantee the quality of image, by which the backlight luminance was gained and the distortion was controlled into a certain range. Meanwhile, a method is also proposed to simplify the calculation. Successive searches will be made on the basis of the 0.7, 0.8 and 0.9 times of the maximum luminance, and stop when RPSNR≥30. In order to guarantee the quality of the image, the 0.7 times of the maximum luminance is used as the minimum backlight luminance. It saves much time in calculation and is better applied in hardware.