In information technology, "lossy" compression is a data encoding method that compresses data by discarding (losing) some of it. The procedure aims to minimize the amount of data that needs to be held, handled, and/or transmitted by a computer. The different versions of the photo of the dog at the right demonstrate how much data can be dispensed with, and how the images become progressively coarser as the data that made up the original one is discarded (lost). Typically, a substantial amount of data can be discarded before the result is sufficiently degraded to be noticed by the user.

Lossy compression is most commonly used to compress multimedia data (audio, video, and), especially in applications such as streaming media and internet telephony. By contrast, lossless compression is required for text and data files, such as bank records and text articles. In many cases it is advantageous to make a master lossless file that can then be used to produce compressed files for different purposes; for example, a multi-megabyte file can be used at full size to produce a full-page advertisement in a glossy magazine, and a 10 kilobyte lossy copy can be made for a small image on a web page.