Transmission of digital subband-coded images over lossy packet networks presents a reconstruction problem at the decoder. This paper presents two techniques for reconstruction of lost subband coefficients, one for low-frequency coefficients and one for high-frequency coefficients. The low-frequency reconstruction algorithm is based on inherent properties of the hierarchical subband decomposition. To maintain smoothness and exploit the high intraband correlation, a cubic interpolative surface is fit to known coefficients to interpolate lost coefficients. Accurate edge placement, crucial for visual quality, is achieved by adapting the interpolation grid in both the horizontal and vertical directions as determined by the edges present. An edge model is used to characterize the adaptation, and a quantitative analysis of this model demonstrates that edges can be identified by simply examining the high-frequency bands, without requiring any additional processing of the low-frequency band. High-frequency reconstruction is performed using linear interpolation, which provides good visual performance as well as maintains properties required for edge placement in the low-frequency reconstruction algorithm. The complete algorithm performs well on loss of single coefficients, vectors, and small blocks, and is therefore applicable to a variety of source coding techniques.