Grouping and navigating media files within a playlist on a computer-readable medium. Invention software selects media files according to a grouping criterion to define a group from the media files. The invention software generates a group header associated with the group. The group header includes a value identifying the defined group and a reference to another group to enable navigation. The invention software stores the selected media files, the playlist, the defined groups, and the associated group headers on a computer-readable medium. The invention software also includes playback software for navigating and selecting media files via groups within a playlist. In one embodiment, the invention is operable as part of a compressed media format having a set of small files containing metadata, menus, and playlists in a compiled binary formal designed for playback on feature-rich personal computer media players as well as low cost media players.