This paper presents a new approach to index color images using the features extracted from the error diffusion block truncation coding (EDBTC). The EDBTC produces two color quantizers and a bitmap image, which are further processed using vector quantization (VQ) to generate the image feature descriptor. Herein two features are introduced, namely, color histogram feature (CHF) and bit pattern histogram feature (BHF), to measure the similarity between a query image and the target image in database. The CHF and BHF are computed from the VQ-indexed color quantizer and VQ-indexed bitmap image, respectively. The distance computed from CHF and BHF can be utilized to measure the similarity between two images. As documented in the experimental result, the proposed indexing method outperforms the former block truncation coding based image indexing and the other existing image retrieval schemes with natural and textural data sets. Thus, the proposed EDBTC is not only examined with good capability for image compression but also offers an effective way to index images for the content-based image retrieval system.