Delta encoding is a way of storing or transmitting data in the form of differences (deltas) between sequential data rather than complete files; more generally this is known as data differencing. Delta encoding is sometimes called delta compression, particularly where archival histories of changes are required (e.g., in revision control software).

The differences are recorded in discrete files called "deltas" or "diffs". In situations where differences are small – for example, the change of a few words in a large document or the change of a few records in a large table – delta encoding greatly reduces data redundancy. Collections of unique deltas are substantially more space-efficient than their non-encoded equivalents.

From a logical point of view, the difference between two data values is the information required to obtain one value from the other – see relative entropy. The difference between identical values (under some equivalence) is often called 0 or the neutral element.

Perhaps the simplest example is storing values of bytes as differences (deltas) between sequential values, rather than the values themselves. So, instead of 2, 4, 6, 9, 7, we would store 2, 2, 2, 3, −2. This reduces the variance (range) of the values when neighbor samples are correlated, enabling a lower bit usage for the same data. IFF 8SVX sound format applies this encoding to raw sound data before applying compression to it. Not even all 8-bit sound samples compress better when delta encoded, and the usability of delta encoding is even smaller for 16-bit and better samples. Therefore, compression algorithms often choose to delta encode only when the compression is better than without. However, in video compression, delta frames can considerably reduce frame size and are used in virtually every video compression codec.

A delta can be defined in 2 ways, symmetric delta and directed delta. A symmetric delta can be expressed as

A directed delta, also called a change, is a sequence of (elementary) change operations which, when applied to ${\displaystyle version_{1}}$, yields another, ${\displaystyle version_{2}}$ (note the correspondence to transaction logs in databases). In computer implementations, they typically take the form of a language with two commands: copy data from ${\displaystyle version_{1}}$ and write literal data.

A variation of delta encoding which encodes differences between the prefixes or suffixes of strings is called incremental encoding. It is particularly effective for sorted lists with small differences between strings, such as a list of words from a dictionary.

The nature of the data to be encoded influences the effectiveness of a particular compression algorithm.