Abstract: This paper presents a novel coding technology based on grey prediction. The method codes the predictive error (difference between the predicted value and true value) of each pixel instead of its real gray scale in the image. It has several advantages. Firstly, it is easy to predict the pixel’s value; secondly, it reduces the relativity of the coded data by the differential coding technique that is beneficial to improving the compression capability. The simulation shows that the method is effective and can be applied in many fields.