In order to satisfy the requirements of multimedia technologies, image compression requires higher performance, and how to enhance the compression ratio becomes more and more important. Therefore, a new standard of still image compression, JPEG2000, is currently being developed. JPEG2000 encoding system adopts Discrete Wavelet Transform (DWT) and Embedded Block Coding with Optimal Truncation (EBCOT). Compared with JPEG, JPEG2000 provides several characteristics such as lossy and lossless compression, ROI (Region of Interest), random access, progressive transmission and good error resilience for an image. It may replace JPEG as the most popular image compression format in the near future.