MediaWiki's extended image syntax allows images to be automatically thumbnailed.
Image thumbnailing requires either ImageMagick or GD library. ImageMagick is recommended since it produces better quality thumbnails than GD library. It can be downloaded from imagemagick.org. Neither of these are part of the default MediaWiki installation but MediaWiki can be installed without this function.
To enable image thumbnailing, set $wgUseImageResize and $wgUseImageMagick to true in LocalSettings.php. Make sure the wgImageMagickConvertCommand variable points to the proper location of the convert command of your installation and that the command is executable by the web server process.
If both ImageMagick and GD library are installed, MediaWiki will use GD library. To change this, edit LocalSettings.php after installation and change $wgImageMagickConvertCommand from "/usr/bin/convert"; to "/usr/local/bin/convert";.
See also: Help:Images and other uploaded files