Fixing blown out highlights naturally in Photoshop
How to recover highlights and improve their color using a variety of tools and methods in Adobe Photoshop

Nearly every time I edit a raw outdoor/landscape image in Adobe Lightroom or Camera Raw, I pull down the Highlights. More often than not, this is a necessary step to recover overly bright regions of the image and bring back detail, texture and color.
The problem with the Highlights slider, however, is that it can often make bright highlights appear desaturated and gray. When you think about it, the shift towards gray makes technical sense, for bright highlights are naturally close to white, which means they contain minute traces of color (if any at all). So when near-white highlights are darkened, their neutrality is maintained.
For example, here's a sampled area of an unedited raw image with bright highlights on the verge of blowing out. The pixels are practically white.

If we pull down the Highlights and Whites sliders in Camera Raw, the algorithm does an acceptable job of decreasing brightness and recovering color, while also bumping up saturation a few percentages points (image below).

For some images, this might be enough to improve the brightest pixels. But if we step back and look at the colors and tones in the rocks (see image below), the bright highlights appear slightly pale, gray and washed out compared to the richer, reddish-orange hues in nearby areas that weren’t hit by direct sunlight.

What I'd like to do is reduce the luminance of the bright highlights, but also inject extra color, as if the highlighted areas were illuminated with softer, more diffused light. I'd also like to blend them more into the surrounding rock so they appear more natural and authentic.
We could try to accomplish this in Lightroom, Camera Raw or other raw photo editors, but in my experience, Photoshop is the best tool for this type of detailed work.
In the video below, I demonstrate how to improve blown-out highlights in Photoshop with and without luminosity masks (using the excellent TK9) and share which highlight recovery technique is my favorite.
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