Abstract-This paper develops a steganography-based paradigm for lossless-quality compression of high-resolution color images acquired by megapixel cameras. Our scheme combines space-domain and frequency-domain image processing operations where in the space domain, color-brightness separation is exploited, and in the frequency domain, spectral properties of the Fourier magnitude and phase of the color image is exploited. Working in both domains concurrently allows for an approach to ultrahigh-resolution image compression that addresses both issues of quality and storage size. Experimental results as well as empirical observations show that our technique exceeds the highest quality JPEG image compression standard in terms of compression rates while being very competitive with JPEG in the overall fidelity of the decompressed image, with the added advantage of being able to recover the original fine details in the color image without any degradations common in lossy image compression techniques.