A digital video compression system and an apparatus implementing this system are disclosed. Specifically, matrices of pixels in RGB, YUV or CMYK formats are accepted for data compression. The data are rearranged in 8x8 pixel blocks, each block being of one pixel component type. The pixel data are then subjected to a discrete cosine transform (DCT). A quantization step eliminates DCT coefficients having amplitude below a set of preset thresholds. The video signal is further compressed by coding the elements of the quantized matrices in a zig-zag manner. This representation is further compressed by Huffman codes. Decompression of the signal is substantially the reverse of compression steps. The inverse discrete cosine transform (IDCT) may be implemented by the DCT circuit. The circuits may be implemented in a single integrated circuit chip. Three levels of compression rate control are provided during processing of video data.