This paper describes a prototype telemedicine system for remote 3D radiation treatment planning. Due to voluminous medical image data and image streams generated in interactive frame rate involved in the application, the importance of deploying adjustable lossy to lossless compression techniques is emphasized in order to achieve acceptable performance via various kinds of communication networks. In particular, the compression of the data substantially reduces the transmission time and therefore allows large-scale radiation distribution simulation and interactive volume visualization using remote supercomputing resources in a timely fashion. The compression algorithms currently used in the software we developed are JPEG and H.263 lossy methods and Lempel-Ziv (LZ77) lossless methods. Both objective and subjective assessment of the effect of lossy compression methods on the volume data are conducted. Favorable results are obtained showing that substantial compression ratio is achievable within distortion tolerance. From our experience, we conclude that 30dB (PSNR) is about the lower bound to achieve acceptable quality when applying lossy compression to anatomy volume data (e.g. CT). For computer simulated data, much higher PSNR (up to 100dB) is expectable. This work not only introduces such novel approach for delivering medical services that will have significant impact on the existing cooperative image-based services, but also provides a platform for the physicians to assess the effects of lossy compression techniques on the diagnostic and aesthetic appearance of medical imaging.