In this paper, we proposed a two-step algorithm based on the combination of the exemplar-based algorithm and the illumination model to deal with specular images, especially those contain saturated pixels in the highlight areas. First the proposed modified exemplar-based algorithm is employed to process the unsaturated specular pixels under the supervision of illumination model. Then we inpaint the rest regions in which the pixels are saturated with original exemplar-based algorithm to obtain the final result. Experimental results demonstrate that the proposed algorithm performs better on the images with saturated pixels in the highlight areas compared with classical highlight removal and image inpainting algorithms.