The contourlet transform is a new two-dimensional extension of the wavelet transform using multiscale and directional filter banks. The contourlet expansion is composed of basis images oriented at various directions in multiple scales, with flexible aspect ratios. Given this rich set of basis images, the contourlet transform effectively captures smooth contours that are the dominant feature in natural images. We begin with a detailed study on the statistics of the contourlet coefficients of natural images: using histograms to estimate the marginal and joint distributions and mutual information to measure the dependencies between coefficients. This study reveals the highly non-Gaussian marginal statistics and strong interlocation, interscale, and interdirection dependencies of contourlet coefficients. We also find that conditioned on the magnitudes of their generalized neighborhood coefficients, contourlet coefficients can be approximately modeled as Gaussian random variables. Based on these findings, we model contourlet coefficients using a hidden Markov tree (HMT) model with Gaussian mixtures that can capture all interscale, interdirection, and interlocation dependencies. We present experimental results using this model in image denoising and texture retrieval applications. In denoising, the contourlet HMT outperforms other wavelet methods in terms of visual quality, especially around edges. In texture retrieval, it shows improvements in performance for various oriented textures.