OBJECTIVE. The purpose of this study was to develop an effective, inexpensive teleradiology image-transmission system for transfer of MR studies using wavelet transform image compression. CONCLUSION. We describe an efficient system for implementing teleradiology capability for transmission of diagnostic MR images. The system uses the wavelet transform to achieve greater than 90% image compression, with standard modem transmission times of less than 5 sec per compressed image. The method is inexpensive and can be implemented using commonly available workstation and MR scanner capabilities.