The process is a completely closed system employing only image data, and it can be applied to any digital multi-spectral data set. A computer technique has been developed to produce spectral reflectance images from multi-spectral images. Hue, intensity and saturation (HIS) colour spatial transformation is used to compute the hue of a three-band colour composite image, and the image pixels with the same hue value are taken as a single material. The average brightness values of the pixels with the same hue are calculated for each band separately, and the distribution of the average values is taken as spectral reflectance image. This spectral reflectance image, which is essentially free of topographic modulation function, but includes spectral information, can be used in image classification, or other image processing. This technique has been successfully applied to recognize ore bearing rock in Inner Mongolia, China by Landsat TM images. The HIS transformation model is a new, very simple and practical technique. It is potentially useful for extracting spectral reflectance information and suppressing the terrain effect.