A novel and useful method and system of optimized image compression of digital pathology slide images. The optimized image compression mechanism exploits the special color properties of the stained tissue represented by the digital pathology slides and provides an image compression algorithm having improved rate-distortion performance. Optimized color transforms are pre-computed using training sets of pathology slide image scan data for each stain type. The optimized color transforms are used to compress input slide image scans resulting in more efficient image streaming enabling users to review extremely large digital slide scans from any connected location, such as in a hospital, satellite center, home or on a mobile telephone.