Abstract: An image processing system stores image files in a memory device at a number of incremental quality levels. Each image file has an associated image quality (that is fidelity or resolution) level corresponding to a quality level at which the corresponding image has been encoded. The images are initially encoded by applying a predefined transform, such as a DCT transform or wavelet-like transform, to image data received from an image capture mechanism and then applying a data compression method to the transform data. The image is regenerated by successively applying a data decompression method and an inverse transform to an image file.