One of the most common image formats seen today is the jpeg. As its name implies, jpeg was invented for the benefit of digital photography. Like GIF, a jpeg uses compression to reduce file sizes. Unlike GIF, that is all it does; it has no additional features like transparency or animation.

Jpeg compression is a complex topic, and one that I have to admit I have not completely understood. Fortunately, the fundamentals of the topic are sufficient to know when to use jpeg over other formats. Jpeg is a lossy format; it discards information in order to reduce the file size. Jpeg compression removes some of the intermediate colors in a gradient, resulting in color "banding." At high levels of compression, this banding can become very noticeable, but at lower compression ratios, 50% or higher, the color loss is much less obvious. The compression also tends to add noise to solid-color areas of an image.

Because jpeg is a lossy algorithm, it is inadviseable to use it for anything other than final exports of an image. Each time a jpeg is resaved, a little more information is lost.

Jpeg is best used for the final export of a photographic or highly textured image. It does not do well with flat-colored artwork or sharp lines. Compressing text with jpeg will almost always produce blurry edges and obvious visual artifacts.