In information technology, lossy compression or irreversible compression is the class of data encoding methods that uses inexact approximations and partial data discarding to represent the content. These techniques are used to reduce data size for storing, handling, and transmitting content. The different versions of the photo of the cat to the right show how higher degrees of approximation create coarser images as more details are removed. This is opposed to lossless data compression (reversible data compression) which does not degrade the data. The amount of data reduction possible using lossy compression is much higher than through lossless techniques.

Well-designed lossy compression technology often reduces file sizes significantly before degradation is noticed by the end-user. Even when noticeable by the user, further data reduction may be desirable (e.g., for real-time communication, to reduce transmission times, or to reduce storage needs). The most widely used lossy compression algorithm is the discrete cosine transform (DCT), first published by Nasir Ahmed, T. Natarajan and K. R. Rao in 1974. Recently, a new family of sinusoidal-hyperbolic transform functions, which have comparable properties and performance with DCT, have been proposed for lossy compression.[1]

Lossy compression is most commonly used to compress multimedia data (audio, video, and images), especially in applications such as streaming media and internet telephony. By contrast, lossless compression is typically required for text and data files, such as bank records and text articles. It can be advantageous to make a master lossless file which can then be used to produce additional copies from. This allows one to avoid basing new compressed copies off of a lossy source file, which would yield additional artifacts and further unnecessary information loss.