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Packbits compression seeks repeated data values. Packbits is considered an RLE (run-length encoding) compression scheme because it looks for "runs" or repeated values, and tallies their number, or "length". While its name implies that runs of bits are "packed" together, it is actually runs of bytes. It is very similar to the Macintosh Packbits compression used by Macpaint, except that the Packbits compression used for a TIFF allows the dimensions of the image to vary.

Packbits works by reducing repeated strings of the same characters into two components: the "run count" and the "run value". The count and value are stored in one byte each. Each two-byte grouping is referred to as an RLE packet. It is not a good compression scheme for images with large color ranges, as these do not tend to have many runs of the same color.

The terms "RLE" and "Packbits" are often used synonymously.