Volume rendering generates 2D images by ray tracing 3D volume data. This technique imposes considerable demands on storage space as the data set grows in size. In this paper we describe a method to render compressed volume data directly to reduce the memory requirements of the rendering process. The volume data was compressed by a technique called Laplacian pyramid. A compression ratio of 10:1 was achieved by uniform quantization over the Laplacian pyramid. The quality of the images obtained by this technique is virtually indistinguishable from that of the images generated from the uncompressed volume data. A significant improvement in computational performance was achieved by using a cache algorithm to temporarily retain the reconstructed voxels to be used by the adjacent rays.