Abstract: According to the characteristics of digital elevation models ( DEM) in geographic information system (GIS), a DEM compressing method based on wavelet transform is put forward. Methods to select wavelet filter and to design optimum scale quantizer are presented. Furthermore, wavelet coefficients of DEM are analyzed deeply. The experimental DEM data are tested with this method; the testing results show that the algorithm is feasible and valid, and that the data reconstruction quality is satisfactory even when the compressing ratio is high.