— In this paper, we propose a quantizer design algorithm that is optimized for source localization in sensor networks. For this application, the goal is to minimize the amount of information that the sensor nodes have to exchange in order to achieve a certain source localization accuracy. We show that this goal can be achieved more efficiently when “application-specific” quantizers are used. Our proposed quantizer design algorithm uses a cost function that takes into account the distance between the actual source position and the position estimated based on quantized data. We also propose a distributed encoding algorithm that is applied after quantization and achieves rate savings by merging quantization bins without any degradation of localization performance. The merging technique in the encoding algorithm exploits the fact that certain combinations of quantization bins at each node cannot occur because the corresponding spatial regions have an empty intersection. We apply th...