We have demonstrated that 2D motion picture coding technique can be used effectively to compress the holographic fringe pattern. It is not practical to apply 2D image compression directly to the hologram because the character of the holographic fringe data is quite different from that of normal 2D images. Before the compression, we segment and transform hologram to obtain local spatial frequency spectra of the holographic fringe. These segmented spectra of the hologram become similar to a series of perspective images of the object taken by laterally moving camera. Therefore, 2D moving image compression technique, such as MPEG, can be used. Since the compression rates and image quality depend on the segmentation size and MPEG parameters, we seek the optimum condition to obtain high compression rate with small affect on image quality. We will also discuss experimental results of the relation between compression rates and image quality obtained by the proposed methods.© (1996) COPYRIGHT SPIE--The International Society for Optical Engineering. Downloading of the abstract is permitted for personal use only.