In this paper, a new algorithm which adopts the techniques of double prediction and the Pareto probability model was applied to encode the DC term in the JPEG compression process. Conventionally, the DC term was encoded by differential coding, i.e., the difference of the DC values between the current block and the previous block. In this paper, we first use the DC terms of four adjacent blocks to predict the current DC value. We then further use the prediction error of the four adjacent blocks to estimate the variance of the prediction error of the current block. We call it the double prediction algorithm. Next, the Pareto distribution is applied to model the probability distribution of the prediction error. Simulation results show that, with the proposed algorithms, the data size required for DC terms is significantly reduced by 25% ~ 60% and a much higher compression rate can be achieved.