Abstract: An apparatus is provided for generating perceptually lossless image data or perceptually enhanced image data including: a color transform unit for color transforming a received image to a desired color space, forming converted color-space (CCS) images; a transform unit for receiving CCS images and transforming the CCS images into transformed CCS images each containing a set of transform coefficients; a quantization unit to quantize the transformed CCS images to form quantized CCS images; an image processor for receiving and processing transformed or quantized CCS images to produce optimized CCS images that are perceptually lossless or perceptually enhanced in quality; and an encoder for compressing the optimized CCS images; wherein the compressed optimized CCS images are subsequently prepared for storage and/or transmission.