This is accomplished using the JCE plugin: mediabox.

For more info: www.joomlacontenteditor.net/support/tutorials/jcemediabox/266-create-an-image-popup

1. Preparation: Have both images uploaded--the thumbnail and the larger image.

2. Add the thumbnail image to the article or module, per usual.

3. Go get the relative address of the larger image (relative means /images/whatever/yourphoto.jpg -- do not include the domain name in the url). You can use the normal image edit/upload function to go find and get the url for the appropriate image.

4. Click on the thumbnail image in the article using the AdvLink icon. On the Link tab, enter the copied relative URL of the larger image. Click on the Advanced tab. From the class list, select "jcepopup."

5. OPTIONALLY, if you have MULTIPLE IMAGES that you want the user to be able to page through on the larger photos (obviously, they need to be in the same article), you can do the following to GROUP photos together:
    a) On the Advanced tab of the AdvLink function, click on the first Relationship pull-down: Relationship page to target. At the bottom of the select list, click "Add Value" and enter some appropriate group name. Enter that same group name for all images that you want the user to be able to page through.

You can see the example in the more info link: www.joomlacontenteditor.net/support/tutorials/jcemediabox/266-create-an-image-popup