A compression technique that does not decompress data back to 100% of the original. Lossy methods provide high degrees of compression and result in very small compressed files, but there is a certain amount of loss when they are restored.

Audio, video and some imaging applications can tolerate loss, and in many cases, it may not be noticeable to the human ear or eye. In other cases, it may be noticeable, but not that critical to the application. The more tolerance for loss, the smaller the file can be compressed, and the faster the file can be transmitted over a network. Examples of lossy file formats are MP3, AAC, MPEG and JPEG.

Lossy compression is never used for business data and text, which demand a perfect "lossless" restoration. See lossless compression, MP3, AAC, MPEG and JPEG.