A compressed file is one where the data belonging to the file has been reduced in size to save space or data transmission time. For example, software developers make use of various compression utilities to reduce the size of installation files distributed on removable media. At run-time, of course, the file is de-compressed automatically, with no user intervention needed.

There are thousands of different compression methods and the compression algorithms used by them vary. At the simplest level, however, compression could be as straightforward as removing repeating characters in a file (a data area in a program, for example, may be initialized with zeroes) and replacing them with a short marker that specifies how many bytes have been removed and what character should be there.

While compression is used in legitimate programs, it is also used by authors of malicious code. It is very common for Trojans, in particular, to be released in compressed form (and sometimes re-released in a re-packaged form).