Texture compression is necessary for limited storage and low bandwidth devices. While lossy compressions are effective, quality of texture after recovery becomes an issue. We propose an order-of-two texture compression method—O2TC (Order of 2 Texture Compression) to achieve high compression rate, easy decompression, and high quality after decompression. O2TC tries to exploit virtues in binary system. Its attributes include: judicious selection and coding of representative base colors, and simple and parallelizable retrieval of block of texels. We use either a pair of base colors or a base colors and a difference, and simple and fast binary calculations—without *, ÷ or approximation—to inter/extrapolate them into representative colors. Truncation error upper bound is also minimized with implicit color bits. With 2’s complement arithmetic, we further reduce the compression/decompression error. And alpha channel can be treated the same. Compared with renowned S3TC’s DXT5, our method has much simplified decompression with better texture quality—0.37, 2.80 and 0.15 dB better on average with O2TC RGB888, 8-color, and Plain64-64 options, respectively, on popular alpha maps.