Image compression plays a crucial role in many important and diverse applications requiring efficient storage and transmission. This work mainly focuses on a wavelet transform (WT) based compression of fingerprint images and the subsequent classification of the reconstructed images. The algorithm developed involves multiresolution wavelet decomposition, uniform scalar quantization, entropy and run- length encoder/decoder and K-means clustering of the invariant moments as fingerprint features. The performance of the WT-based compression algorithm has been compared with JPEG current image compression standard. Simulation results show that WT outperforms JPEG in high compression ratio region and the reconstructed fingerprint image yields proper classification.