A system and method for generating bounded-loss color transformation employed in the compression and decompression of multi-spectral images is provided. The bounded-loss color space transformations provide transformations from a first color space to a second color space and back to the first color space with bounded loss or error. The bounded loss or error allows for the near lossless compression and reconstruction of multi-spectral images transformed from a first color space to a second color space and ultimately back to the first color space.