In this paper, a novel Wavelet Energy based diagnostic distortion (WEDD) measure is proposed to assess the reconstructed signal quality for ECG compression algorithms. WEDD is evaluated from the Wavelet coefficients of the original and the reconstructed ECG signals. For each ECG segment, a Wavelet energy weight vector is computed via five-level biorthogonal discrete Wavelet transform (DWT). WEDD is defined as the sum of Wavelet energy weighted percentage root mean square difference of each subband. The effectiveness of this measure is validated by linear (linear polynomial and cubic polynomial) and nonlinear (logistic) regression analysis between the computed WEDD values and the mean opinion score (MOS) given by cardiologists. WEDD provides a better prediction accuracy and exhibits a statistically better monotonic relationship with the MOS ratings than Wavelet based weighted percentage root mean square difference (PRD) measure (WWPRD), PRD and other objective measures. Standard correlation coefficient and Spearman rank-order correlation coefficient (SROCC) between the WEDD/MOS ratings is 0.969 and 0.9624, respectively. © 2007 Elsevier Ltd. All rights reserved.