The topic of stereo video is getting more attention among these days due to its high quality of visual effect. However, the large volume of data is the problem of its application. The topic of this thesis is to investigate a compression technique by Wavelet compression on the stereo video data. There is much similarity between the parallax videos. This similarity is obtained by a motion compensation technique: the optical flow computing. Optical flow proposed by Horn and Schunck was originally developed in the field of computer vision for the application of moving detection. In this thesis we apply the optical flow to compress the similarity information between the parallax stereo video. On the other hand, the Wavelet transformation has been proved to be a successful technique for multiscale modeling. We therefore applying the Wavelet transform combined with the zerotree compression to compress the fields of optical flow. Experimental results in this thesis have demonstrated different effects in different situations.