A processing unit, method, and medium for decompressing or generating textures within a graphics processing unit (GPU). The textures are compressed with a variable-rate compression scheme such as JPEG. The compressed textures are retrieved from system memory and transferred to local cache memory on the GPU without first being decompressed. A table is utilized by the cache to locate individual blocks within the compressed texture. A decompressing shader processor receives compressed blocks and then performs on-the-fly decompression of the blocks. The decompressed blocks are then processed as usual by a texture consuming shader processor of the GPU.