The μ-law algorithm (sometimes written mu-law, often abbreviated as u-law) is a companding algorithm, primarily used in 8-bit PCM digital telecommunications systems in North America and Japan. It is one of the two companding algorithms in the G.711 standard from ITU-T, the other being the similar A-law. A-law is used in regions where digital telecommunication signals are carried on E-1 circuits, e.g. Europe.

The terms PCMU, G711u or G711MU are used for G711 μ-law.

Companding algorithms reduce the dynamic range of an audio signal. In analog systems, this can increase the signal-to-noise ratio (SNR) achieved during transmission; in the digital domain, it can reduce the quantization error (hence increasing the signal-to-quantization-noise ratio). These SNR increases can be traded instead for reduced bandwidth for equivalent SNR.

At the cost of a reduced peak SNR, it can be mathematically shown that μ-law's non-linear quantization effectively increases dynamic range by 33 dB or 5+1⁄2 bits over a linearly-quantized signal, hence 13.5 bits (which rounds up to 14 bits) is the most resolution required for an input digital signal to be compressed for 8-bit μ-law.

The μ-law algorithm may be described in an analog form and in a quantized digital form.

For a given input x, the equation for μ-law encoding is $${\displaystyle F(x)=\operatorname {sgn}(x){\dfrac {\ln(1+\mu |x|)}{\ln(1+\mu )}},\quad -1\leq x\leq 1,}$$

where μ = 255 in the North American and Japanese standards, and sgn(x) is the sign function. The range of this function is −1 to 1.

μ-law expansion is then given by the inverse equation: $${\displaystyle F^{-1}(y)=\operatorname {sgn}(y){\dfrac {(1+\mu )^{|y|}-1}{\mu }},\quad -1\leq y\leq 1.}$$