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We present the quality evaluation results for medical images compressed by using JPEG 2000. The compressed images were produced by an embedded image compression system developed based on Philips Trimedia Kenobi board which can be used for real time clinical applications. The comparison is made between JPEG and JPEG 2000 since the JPEG compression is currently used by the DICOM standard. Simulations on different kind of images showed that the JPEG 2000 achieves better performance against JPEG in terms of image quality at the same bit rate. The DICOM standard for the medical community will also likely adopt the JPEG 2000 compression as its compression standard. This work attempts to provide more evidence to support the adoption of JPEG 2000.