ICER-3D is a progressive, wavelet-based compressor for hyperspectral images. ICER-3D is derived from the ICER image compressor. ICER-3D can provide lossless and lossy compression, and incorporates an error-containment scheme to limit the effects of data loss during transmission. The three-dimensional wavelet decomposition structure used by ICER-3D exploits correlations in all three dimensions of hyperspectral data sets, while facilitating elimination of spectral ringing artifacts. Correlation is further exploited by a context modeler that effectively exploits spectral dependencies in the wavelet-transformed hyperspectral data. Performance results illustrating the benefits of these features are presented.