A method for fast and low bit-rate compression of digital holograms based on a new vector quantization (VQ) method known as the skip-dimension VQ (SDVQ) is proposed. Briefly, a complex hologram is converted into a real off-axis hologram, and partitioned into a set of image vectors. The image vectors are passed into a graphic processing unit (GPU), and compressed through SDVQ into a set of code indices considerably smaller in data size than the source hologram. Experimental evaluation reveals that our scheme is capable of compressing a digital hologram to a compression ratio of over 500 times, in approximately 20–22 ms.