Photoplethysmography (PPG) is a popular diagnostic tool for the assessment of various cardiovascular functions. Under continuous ambulatory measurements, PPG data get corrupted due to motion artifact (MA). Thus, on-board pulse signal quality assessment (SQA) before transmission can save the battery life of the wearable device for portable health monitoring applications. This article describes an SQA guided compression (SQAGC) of PPG data using a modified gain-shaped vector quantization (GSVQ) technique. The SQA was performed using kurtosis and autocorrelation to generate a binary classification rule to detect good quality pulses. Only these were considered for further compression. A notable contribution is reconstruction error minimization using the extracted features from the residual signal using a deep autoencoder (DAE), achieving a low percentage root-mean-squared difference (PRD). The SQAGC technique was evaluated using public databases like MIMIC-II, BIDMC, and PRRB as well as with real volunteers’ PPG collected in the laboratory environment. The SQA achieved an accuracy of 96.5% to identify good quality PPG segments out of expert annotated 9200 beats. The compression factor (and PRD) with 400 min duration data from Physionet MIMIC-II, BIDMC, PRRB, and volunteers’ data were 15.8 (and 0.31), 15.7 (and 0.21), 17.8 (and 0.33), and 18.2 (and 0.59), respectively, using 12-bit resolution and 125 Hz sampling. A real-time on-device implementation using quad-core ARM Cortex-A53, 1.2 GHz, supported by 1 GB RAM, achieved a latency of 546 ms with 327 kB of memory engagement for a 3 s PPG window. The compression ratio (CR) achieved comparable results, while PRD outperforms the published results using MIMIC-II data set.