A method for concealing errors in compressed images in the JPEG 2000 format diosclosed. JPEG2000 (ISO/IEC 15444) is the new standard for image compression catering to different needs of various applications. This standard is much more advanced than JPEG and is rich in features. An Error concealment method in JPEG 2000 is provided which mainly deals with estimating the lost regions in a Wavelet Transformed image and works in Wavelet Transform Domain. This results in optimum error concealment and therefore, The method is applied before taking Inverse DWT.