In this paper we analyse the effects that JPEG and JPEG2000 compression have on subspace appearance-based face recognition algorithms. This is the first comprehensive study of standard JPEG2000 compression effects on face recognition, as well as an extension of existing experiments for JPEG compression. A wide range of bitrates (compression ratios) was used on probe images and results are reported for 12 different subspace face recognition algorithms. Effects of image compression on recognition performance are of interest in applications where image storage space and image transmission time are of critical importance. It will be shown that not only that compression does not deteriorate performance but it, in some cases, even improves it slightly. Some unexpected effects will be presented (like the ability of JPEG2000 to capture the information essential for recognizing changes caused by images taken later in time) and lines of further research suggested.