A Huffman coding approach enhanced with wavelet transform is applied to compress power system disturbance data. The acquired data of the disturbance signal is first decomposed into higher frequency and lower frequency components by wavelet transform. The Huffman coding technique is then used to reduce the amount of data more effectively. The data transmission and storage capability can also be enhanced. This method has been tested under disturbance scenarios that include: voltage sag, voltage swell and momentary interruption. Test results demonstrated the feasibility of the method.