The standardization effort of the next ISO standard for compression of the still image, JPEG2000, has recently reached International Standard (IS) status. This wavelet-based standard outperforms the Discrete Cosine Transform (DCT) based JPEG in terms of compression ratio, as well as, quality. In this study, the performance of JPEG2000 is evaluated for aerial image compressions. Different compression ratios are applied to scanned aerial photos at the 1:5 000 scale. Both the image quality measurements and the accuracy of photogrammetric point determination aspects are examined. The evaluation of image quality is based on visual analysis of the objects in the scene and on the computation of numerical indices, including RMSE, entropy, and Peak Signal-to-Noise Ratio (PSNR). The geometric quality of JPEG2000 with different compression ratios is studied for some photogrammetric operations, including interior orientation, relative orientation, absolute orientation, and DSM generation. The objective of this study is to explore the possibility of JPEG2000 for replacing JPEG as a standard in photogrammetric operations.