A three-dimensional (3-D) image-compression algorithm based on integer wavelet transforms and zero-tree coding is presented. The embedded coding of zerotrees of wavelet coefficients (EZW) algorithm is extended to three dimensions, and context-based adaptive arithmetic coding is used to improve its performance. The resultant algorithm, 3-D CB-EZW, efficiently encodes 3-D image data by the exploitation of the dependencies in all dimensions, while enabling lossy and lossless decompression from the same bit stream. Compared with the best available two-dimensional lossless compression techniques, the 3-D CB-EZW algorithm produced averages of 22%, 25%, and 20% decreases in compressed file sizes for computed tomography, magnetic resonance, and Airborne Visible Infrared Imaging Spectrometer images, respectively. The progressive performance of the algorithm is also compared with other lossy progressive-coding algorithms. [C] 2000 Optical Society of America OCIS codes: 100.6890, 100.7410.