This paper proposes a new blocking artifact reduction algorithm using an adaptive filter based on classifying the block boundary area. Generally, block-based coding, such as JPEG and MPEG, introduces blocking and ringing artifacts to an image, where the blocking artifact consists of grid noise, staircase noise, and corner outliers. In the proposed method, staircase noise and corner outliers are reduced by a 1D low-pass filter. Next, the block boundaries are divided into two classes based on the gradient of the pixel intensity in the boundary region. For each class, an adaptive filter is applied so that the grid noise is reduced in the block boundary regions. Thereafter, for those blocks with an edge component, the ringing artifact is removed by applying an adaptive filter around the edge. Finally, high frequency components are added to those block boundaries where the natural characteristics have been lost due to the adaptive filter. The computer simulation results confirmed a better performance by the proposed method in both the subjective and objective image qualities.