Lossy data compression generates distortion or error on the reconstructed image and the distortion becomes visible as the compression ratio increases. Even at the same compression ratio, the distortion appears differently depending on the compression method used. Because of the nonlinearity of the human visual system and lossy data compression methods, we have evaluated subjectively the quality of medical images compressed with two different methods, an intraframe and interframe coding algorithms. The evaluated raw data were analyzed statistically to measure interrater reliability and reliability of an individual reader. Also, the analysis of variance was used to identify which compression method is better statistically, and from what compression ratio the quality of a compressed image is evaluated as poorer than that of the original. Nine x-ray CT head images from three patients were used as test cases. Six radiologists participated in reading the 99 images (some were duplicates) compressed at four different compression ratios, original, 5:1, 10:1, and 15:1. The six readers agree more than by chance alone and their agreement was statistically significant, but there were large variations among readers as well as within a reader. The displacement estimated interframe coding algorithm is significantly better in quality than that of the 2-D block DCT at significance level 0.05. Also, 10:1 compressed images with the interframe coding algorithm do not show any significant differences from the original at level 0.05.