Based on the natural error tolerance of image and multimedia processing, aggressive voltage scaling has been considered for energy savings by trading off accuracy. However, aggressive voltage scaling in image compression may not reduce overall system energy consumption because of the reduction in the compression ratio. Based on the system-level analysis, we present an adaptive pixel and coefficient truncation technique to successfully reduce error rates so that we can achieve great energy savings without significant quality degradation. Our experimental results show that average energy savings of up to 40% can be realized at a trivial implementation cost.