This paper outlines the data handling system (DHS) of a spaceborne hyperspectral imager with an onboard data compressor. The data compression techniques to be used are successive approximation multistage vector quantization and hierarchical self-organizing cluster vector quantization. Considerations and implementation aspects of the DHS related to the onboard data compression are addressed. The impact of anomalies (spikes, saturation, etc.) in the raw data on compression performance is evaluated for the purpose of determining whether or not onboard data scrubbing is required before compression. The evaluation results show that anomalies in raw data have no significant effect on compression. This paper evaluates the impact of preprocessing and the conversion of raw data to radiance units on data compression using remote sensing applications to examine whether or not they should be applied on board before compression. The evaluation results show that preprocessing and radiometric conversion applied either before or after compression have no impact on an application using leaf area index but have impact on a target detection application using spectral unmixing. This paper also examines the combination of the two compression techniques to see if there is a performance improvement over a single technique. The experimental results show that the combined compression system does not perform better than either technique alone. Lastly, the resilience of the two compression techniques against bit errors caused by single event upsets is examined. The experimental results show that there is no loss of data fidelity when the error rate is ≤10–6.