The image segmentation refers to the extraction of region of interest and it plays a vital role in medical image processing. This work proposes multilevel thresholding based on optimization technique for the extraction of region of interest and compression of DICOM images by an improved prediction lossless algorithm for telemedicine applications. The role of compression algorithm is inevitable in data storage and transfer. Compared to the conventional thresholding, multilevel thresholding technique plays an efficient role in image analysis. In this paper, the Particle Swarm Optimization (PSO), Darwinian Particle Swarm Optimization (DPSO), and Fractional Order Darwinian Particle Swarm Optimization (FODPSO) are employed in the estimation of the threshold value. The simulation results reveal that the FODPSO-based multilevel level thresholding generate superior results. The fractional coefficient in FODPSO algorithm makes it effective optimization with fast convergence rate. The classification and blending prediction-based lossless compression algorithm generates efficient results when compared with the JPEG lossy and JPEG lossless approaches. The algorithms are tested for various threshold values and higher value of PSNR indicates the proficiency of the proposed segmentation approach. The performance of the compression algorithms was validated by metrics and was found to be appropriate for data transfer in telemedicine. The algorithms are developed in Matlab2010a and tested on DICOM CT images.