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The significant effort to provide region-based compression and functionality within the MPEG-4 standard is not paralleled in the still-image compression domain. In this paper, we propose an approach to fractal coding of still images that is truly region-based. Unlike previous fractal compression methods the proposed approach compresses an image region-by-region based on a prior segmentation, very much like in MPEG-4; individual regions can be decoded without full image decoding. The method performs the domain/range block matching in frequency domain using a shape-adaptive discrete cosine transform. Experimental results evaluating the performance of the approach are shown.