Method and apparatus for providing texture and/or alpha compression. In one embodiment, the present invention incorporates stored palettes, e.g., a luminance palette and a chrominance palette such that, compressed texture data pertaining to a fixed blocksize is decoded and applied to the stored palettes to extract the texel data. In a second embodiment, the present method uses a plane to estimate the alpha value at each of the texels, and a three-bit correction factor to adjust the estimate to produce a final alpha value.