A system and methods for rotating and compressing digital image data is presented. The system includes an image sensor that vertically and horizontally flips a digital image, an image processor that converts the image into the YCbCr color space, reorder buffers that divide the YCbCr component data into component blocks and rotate the component blocks, and a JPEG encoder that applies JPEG compression to the rotated component blocks. The JPEG encoder differentially encodes DC coefficients of the component blocks in an order that corresponds to the desired rotated image. An index is created by the JPEG encoder that allows for the reconstruction and storing of the rotated component blocks as a rotated JPEG image.