A complete system was built for high-performance image compression based on overlapped block transform. Extensive simulations and comparative studies were carried out for still image compression including benchmark images (Lena and Barbara), synthetic aperture radar (SAR) images, and color images. We have achieved consistently better results than three commercial products in the market (a Summus wavelet codec, a baseline JPEG codec, and a JPEG-2000 codec) for most images that we used in this study. Included in the system are two post-processing techniques based on morphological and median filters for enhancing the perceptual quality of the reconstructed images. The proposed system also supports the enhancement of a small region of interest within an image, which is of interest in various applications such as target recognition and medical diagnosis