The problem of recovering full-color images from a noisy and color-sampled observation is considered. The noise in imaging sensors corrupts the color filter array (CFA) and introduces artifacts during the color interpolation step. Instead of filtering the noise before or after the color interpolation step, we remove the noise during the color interpolation step. This allows us to obtain a color interpolated image without noise and artifacts, especially along the edges and in the detail of the image. Color interpolation is carried out on the weighted color difference domain to consider cross-channel correlation. To avoid artifacts in high frequency regions and improve the performance, an edge indicator function is used and directions of edges are considered in the proposed interpolation method, while noise is simultaneously removed by adaptive noise filtering. As postprocessing, modified filtering on the color difference domain is adopted to improve the quality of the image. Experimental results illustrate the benefits of the proposed method. When compared to conventional methods, the proposed method outperforms them on quantitative and qualitative criteria.