I had this error when rendering an image using DragonFly in Rails. This happened after I upgraded to Lion (ImageMagick was installed using Brew).
I reinstalled ImageMagick, jpeg, libtiff and jasper (reinstalling ImageMagick wasn’t enough by itself).
brew uninstall imagemagick jpeg libtiff jasper
brew install imagemagick
Prior to that, running
identify -list format
and jpeg wasn’t in the list. After reinstalling the above packages jpeg appeared in the list.