Increased noise is a general concern for dual-energy material decomposition. Here, we develop an image-domain material decomposition algorithm for dual-energy CT (DECT) by incorporating an edge-preserving filter into the Local HighlY constrained backPRojection reconstruction (HYPR-LR) framework. With effective use of the non-local mean, the proposed algorithm, which is referred to as HYPR-NLM, reduces the noise in dual-energy decomposition while preserving the accuracy of quantitative measurement and spatial resolution of the material-specific dual-energy images. We demonstrate the noise reduction and resolution preservation of the algorithm with an iodine concentrate numerical phantom by comparing the HYPR-NLM algorithm to the direct matrix inversion, HYPR-LR and iterative image-domain material decomposition (Iter-DECT). We also show the superior performance of the HYPR-NLM over the existing methods by using two sets of cardiac perfusing imaging data. The DECT material decomposition comparison study shows that all four algorithms yield acceptable quantitative measurements of iodine concentrate. Direct matrix inversion yields the highest noise level, followed by HYPR-LR and Iter-DECT. HYPR-NLM in an iterative formulation significantly reduces image noise and the image noise is comparable to or even lower than that generated using Iter-DECT. For the HYPR-NLM method, there are marginal edge effects in the difference image, suggesting the high-frequency details are well preserved. In addition, when the search window size increases from to , there are no significant changes or marginal edge effects in the HYPR-NLM difference images. The reference drawn from the comparison study includes: (1) HYPR-NLM significantly reduces the DECT material decomposition noise while preserving quantitative measurements and high-frequency edge information, and (2) HYPR-NLM is robust with respect to parameter selection.