A reduction in gray scale resolution of digital images from 12 to 8 bits per pixel usually means halving the storage space needed for the images. Theoretically, important diagnostic information may be lost in the process. We compared the sensitivity and specificity achieved by 4 radiologists in reading laser-printed films of original 12-bit MR images and cathode ray tube displays of the same images which had been compressed to 8 bits per pixel using a specially developed computer program. Receiver operating characteristic (ROC) curves showed no significant differences between film reading and screen reading. A paired 2-tailed t-test, applied on the data for actually positive cases, showed that the combined, average performance of the reviewers was significantly better at screen reading than at film reading. No such differences were found for actually negative cases. Some individual differences were found, but it is concluded that gray scale resolution of MR images may be reduced from 12 to 8 bits per pixel without any significant reduction in diagnostic information.