Abstract: According to the PNG image compression process and format requirements, a new format-compatible encryption scheme of PNG image based on the format-preserving encryption is presented. The scheme encrypts on the pixel matrix with the different encryption algorithm for the various types of image before compression. The application of the proposed scheme in two aspects of degradation and confidentiality of PNG image is discussed. The encryption efficiency is analyzed through the experiments. Experiments show that the scheme can effectively achieve the degradation and confidentiality of PNG image, and has a high efficiency.