Abstract: A new data compression method is proposed in this paper, which combines the improved threshold integer wavelet with LZW algorithm. Firstly, by using wavelet transform, the sampled underwater acoustic data are decomposed into low- and high-frequency coefficients. Then, after improved threshold processing to high frequency coefficients, the ones above the threshold are remained, thereby reducing the data amount effectively. Finally, the low-frequency coefficients and remained high-frequency ones are coded by LZW coding and transmitted subsequently. The compression algorithm process is given in the paper. By processing the real ship noise data, the new method can effectively improve SNR, reduce signal distortion level and achieve higher compression ratio, compared with the conventional threshold value method.