In this paper, a new variable block-size transform coding algorithm using information of segmentation is proposed. In general variable block-size transform coding algorithms, the information which is used to form variable blocks is thrown away, but in the proposed algorithm, the information of segmentation which is composed of texture and contour information is maintained for efficient coding. That is, the number of blocks can be reduced by contour information, a DC component of block can be predicted by texture information, and the region compensation, which reduces mean difference between regions, using texture and contour information can diminish the magnitude of AC components. The result is that the proposed algorithm has improved highly the coding efficiency of DC and AC components.