To implement a picture archiving and communication system, clinical evaluation of irreversible image compression with a newly developed modified two-dimensional discrete cosine transform (DCT) and bit-allocation technique was performed for chest images with computed radiography (CR). CR images were observed on a cathode-ray-tube monitor in a 1,024 x 1,536 matrix. One original and five reconstructed versions of the same images with compression ratios of 3:1, 6:1, 13:1, 19:1, and 31:1 were ranked according to quality. Test images with higher spatial frequency were ranked better than those with lower spatial frequency and the acceptable upper limit of the compression ratio was 19:1. In studies of receiver operating characteristics for scoring the presence or absence of nodules and linear shadows, the images with a compression ratio of 25:1 showed a statistical difference as compared with the other images with a compression ratio of 20:1 or less. Both studies show that plain CR chest images with a compression ratio of 10:1 are acceptable and, with use of an improved DCT technique, the upper limit of the compression ratio is 20:1.