Abstract: As a new international standard for image compression JPEG2000 came into being to meet the users' newest demands of better performance and functionality. In this paper, the process, fundamental theories and involved technologies of image compression in JPEG2000PART 1 are presented. Moreover, the realization of some important functions in JPEG2000 is also illustrated. At the end of this paper, the authors make a brief introduction to JPEG2000PART 2, which will be standardized soon, and verify the advancement of JPEG2000 by experimental data.