Transmission of compressed medical images is becoming a vital tool in telemedicine. Thus new methods are needed for efficient image compression. This study discovers the best design parameters for a data compression scheme applied to digital magnetic resonance (MR) images. The proposed technique aims at reducing the transmission cost while preserving the diagnostic information. By selecting the wavelet packet's filters, decomposition level, and subbands that are better adapted to the frequency characteristics of the image, one may achieve better image representation in the sense of lower entropy or minimal distortion. Experimental results show that the selection of the best parameters has a dramatic effect on the data compression rate of MR images. In all cases, decomposition at three or four levels with the Coiflet 5 wavelet (Coif 5) results in better compression performance than the other wavelets. Image resolution is found to have a remarkable effect on the compression rate.