First, we establish necessary and sufficient conditions for embeddings of Bessel potential spaces H σ X (R n ) with order of smoothness less than one, modelled upon rearrangement invariant Banach function spaces X (R n ), into generalized Hölder spaces. To this end, we derive a sharp estimate of modulus of smoothness of the convolution of a function f ∈ X (R n ) with the Bessel potential kernel g σ , 0 < σ < 1. Such an estimate states that if g σ belongs to the associate space of X , thenSecond, we characterize compact subsets of generalized Hölder spaces and then we derive necessary and sufficient conditions for compact embeddings of Bessel potential spaces H σ X (R n ) into generalized Hölder spaces. We apply our results to the case when X (R n ) is the Lorentz-Karamata space L p,q;b (R n ). In particular, we are able to characterize optimal embeddings of Bessel potential spaces H σ L p,q;b (R n ) into generalized Hölder spaces and also compact embeddings of spaces in question. Applications cover both superlimiting and limiting cases.A. Gogatishvili · B. Opic Mathematical Institute, Academy of Sciences of the Czech Republic,Zitná 25,