Quantization takes place after the FDCT has computed and output the coefficients. Compression is created by representing the coefficients with no greater precision than is necessary to achieve the desired image quality.

The 64 values are quantized by dividing each value by a number called a quantum, and, thus, "losing" some of the bits that represented the value. The quanta used depend upon the desired quality and compression.

At the same time, a sort of "average value" for the block called a DC Coefficient is computed. These DC Coefficients are related from block to (adjacent) block, and are actually stored as the difference in the values of the 2 adjacent blocks. These values are passed to the next step in the algorithm, the Entropy Encoding step.

Dequantization reverses the process and introduces still more loss in the image.