A design of low power digital baseband for wireless endoscope capsule is presented. The key design issues involved in this IC are discussed, including implementation of communication protocol, real time image filter and real time JPEG-LS encoder. Power dissipation is lowered through the architectural exploration. The baseband has been implemented in 0.18 μm CMOS technology. Measurement results show that 50% power reduction is achieved when image compression is enabled @ 30 fps for VGA image at 1.2 V supply voltage compared with the situation when image compression is disabled, 11% power reduction is achieved compared with the previous research.