In many multimedia applications, image encryption has to be conducted prior to image compression. This paper proposes an Encryption-then-Compression system using a JPEG friendly perceptual encryption method, which enables to be conducted prior to JPEG compression. The proposed encryption method can provides approximately the same compression per formance as that of JPEG compression without any encryption, where both gray scale images and color ones are considered. It is also shown that the proposed system consists of four block-based encryption steps, and provide a reasonably high level of security.Most of conventional perceptual encryption methods have not been designed for international compression standards, but this paper focuses on applying the JPEG standard, as one of the most widely used image compression standards.