Manual:$wgUseImageMagick

Details
Resizing can be done using PHP's internal image libraries, or using ImageMagick or another third-party converter, e.g. GraphicMagick. These latter converters support more file formats than PHP, which only supports PNG, GIF, JPG, XBM and WBMP. Set $wgUseImageMagick to true to use ImageMagick instead of the builtin functions.

For more information on how to set up ImageMagick, see Manual:Installing third-party tools.

Related settings
You may also need to set $wgImageMagickConvertCommand to be able to use ImageMagick, although this is sometimes done automatically by the installer.

To fine-tune the output of ImageMagick, set $wgSharpenParameter and $wgSharpenReductionThreshold.

Some old MediaWiki installations may have $wgUseImageResize set to false. ImageMagick requires that this setting be set to true, or else it will not work.