First DPCM forecast transformation was implemented to a medical image,and then integer wavelet transform was done to the image. The low frequency coefficients and high frequency coefficients were processed by Huffman code and vector quantification respectively. According to the properties of the wavelet coefficients,most of the energy was focused on the low frequency part. Lossless entropy code was implemented to the low frequency coefficients,and vector quantification was taken to the high frequency ones in order to reduce the redundant information,which was insensitive to person eyes. Finally,the processed low frequency and high frequency coefficients were reconstructed to obtain the compressed image. Compared with the compressions based on Discrete Wavelet Transformation (DWT),JPEG and JPEG2000,experimental results indicate that a high compression ratio and the good compression effect can be obtained by the proposed method.