CNES has launched in May 2002 a new high resolution (2.5m) and large swath (2 x 60km) optical remote sensing satellite: SPOT5. To achieve a high image acquisition capacity with this system, a large on-board mass memory (100 Gbits) together with a 3:1 real-time compression are being used. The quasi-lossless and fixed output rate requirements put on the on-board image compression resulted in the development of a custom algorithm. This algorithm is based on: a DCT decorrelator, a scalar quantizer, an entropy coder and a rate regulator. It has been extensively tested before launch both in terms of quantitative performances and in terms of visual performances. The objectives of the on-orbit validation of the SPOT5 image compression function were the following: (1) Perform an image quality assessment in worst case conditions for the compression. In particular, the THR mode (2.5 m resolution) is potentially sensitive to compression noise and was therefore thoroughly checked for any compression artefacts. Compression noise characteristics were taken into account in the denoising stage of the ground processing for improved performances; (2) Verify the adequacy of the compression parameters with regard to the in-flight characteristics of the instruments (MTF, radiometric spreading, ...); (3) Technological checkout of the compression unit on board the satellite. This paper will present an overview of SPOT5 mission, the methods used for on-orbit validation of the compression and, finally, all the validation results together with the lessons learned throughout this development. On-board image compression for future CNES remote sensing missions will be addressed as a conclusion.