Compression algorithm for screen images, which comes from the Computer Screen, is an important task in the Screen Share technology. Traditional methods are based on the algorithms such as RLE, LZW or JPEG directly, which cannot meet the requirements of both the quality of recovery image and compression ratio to compress screen image respectively. High compression ratio algorithms (JPEG) result in a low quality of image, while no-distortion algorithm (RLE, LZW) leads to a low compression ratio. In order to resolve this contradiction, an effective compression algorithm based on dynamic threshold sub-blocking is proposed in this paper. Before the image compression, Screen image is divided into four sorts of blocks by certain provided rules first, which are named as Pure-color Blocks, Text Blocks, Icon Blocks, and Image Blocks. Then these blocks are compressed separately depended on their characteristic so as to ensure that the quality of recovery image is the overall best and the compression ratio is the highest. Pure-color Block, Text Block, and Icon Block are compressed with no-distortion compression algorithm, and Image Block is compressed with JPEG algorithm. Result of experiments shows that our algorithm has improved quality of recovery image, higher compression ratio, and higher compressed speed than traditional algorithm.