Future orbiting observatories will survey large areas of sky in order to constrain the physics of dark matter and dark energy using weak gravitational lensing and other methods . Lossy compression of the resultant data will improve the cost and feasibility of transmitting the images through the space communication network . We evaluate the consequences of the lossy compression algorithm of Bernstein et al . ( 2010 ) for the high-precision measurement of weak-lensing galaxy ellipticities . This square-root algorithm compresses each pixel independently , and the information discarded is by construction less than the Poisson error from photon shot noise . For simulated space-based images ( without cosmic rays ) digitized to the typical 16 bits per pixel , application of the lossy compression followed by image-wise lossless compression yields images with only 2.4 bits per pixel , a factor of 6.7 compression . We demonstrate that this compression introduces no bias in the sky background . The compression introduces a small amount of additional digitization noise to the images , and we demonstrate a corresponding small increase in ellipticity measurement noise . The ellipticity measurement method is biased by the addition of noise , so the additional digitization noise is expected to induce a multiplicative bias on the galaxies ’ measured ellipticities . After correcting for this known noise-induced bias , we find a residual multiplicative ellipticity bias of m \approx - 4 \times 10 ^ { -4 } . This bias is small when compared to the many other issues that precision weak lensing surveys must confront , and furthermore we expect it to be reduced further with better calibration of ellipticity measurement methods .