One result of the recent advances in different components of imaging systems technology is that these systems have become more resolution-limited and less noise-limited. The most useful tool utilized in characterization of resolution-limited systems is the modulation transfer function (MTF). Our goal is to use the MTF as an image quality measure of image compression implemented by the JPEG (Joint Photographic Experts Group) algorithm and transmitted MpEG (Motion picture Experts Group) compressed video stream through a lossy packet network. Although we realize that the MTF is not an ideal parameter with which to measure image quality after compression and transmission due to the nonlinearity shift-variant process, we examine the conditions under which it can be used as an approximated criterion for image quality. The advantage of using the MTF of the compression algorithm is that it can be easily combined with the overall MTF of the imaging system.