Abstract: The overlapped Z-scan method is presented for two-dimensional discrete wavelet transform (2D-DWT). It can provide an efficient tradeoff between chip area and system power consumption as the internal memory size can be decreased sufficiently with few overheads of the external memory access. An efficient 2D-DWT architecture based on this method is proposed for JPEG2000. In comparison with the line-based scan method, the size of image is set as 256×256 and the scan width is set as 64 lines. Experiment results show that the size of internal memory, based on the proposed method, can be reduced by about 40% with no more than 7.14% overheads of external memory access.