In the study, we present an efficient adaptive KLT algorithm for multispectral image compression. The proposed algorithm is fully exploiting the spectral and spatial correlation in the data. To adapt to the local terrain characteristics of multispectral image, the adaptive KLT algorithm can divide the original image into some proper regions, and transform each region image data set by the corresponding transformation function. Furthermore, the algorithm is suitable for hardware implementation. Simulation results show that the performance of the proposed adaptive KLT algorithm is better than those of the existing algorithms.