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Dimensionality reduction (DR) is of great significance for simplifying and optimizing hyperspectral image (HSI) features. As a widely used DR method, kernel minimum noise fraction (KMNF) transformation preserves the high-order structures of the original data perfectly. However, the conventional KMNF noise estimation (KMNF-NE) uses the local regression residual of neighbourhood pixels, which depends heavily on spatial information. Due to the limited spatial resolution, there are many mixed pixels in HSI, making KMNF-NE unreliable for noise estimation and leading to poor performance in KMNF for classification on HSIs with low spatial resolution. In order to overcome this problem, a mixed noise estimation model (MNEM) is proposed in this paper for optimized KMNF (OP-KMNF). The MNEM adopts the sequential and linear combination of the Gaussian prior denoising model, median filter, and Sobel operator to estimate noise. It retains more details and edge features, making it more suitable for noise estimation in KMNF. Experiments using several HSI datasets with different spatial and spectral resolutions are conducted. The results show that, compared with some other DR methods, the improvement of OP-KMNF in average classification accuracy is up to 4%. To improve the efficiency, the OP-KMNF was implemented on graphics processing units (GPU) and sped up by about 60× compared to the central processing unit (CPU) implementation. The outcome demonstrates the significant performance of OP-KMNF in terms of classification ability and execution efficiency.