To solve the problem of the auxiliary equipment of 600MW generator vibration and sound data take up a lot of storage space and to re-duce its pressure on data transmission, according to the characteristics of the data, the algorithm is put forward based on the wavelet threshold denoising and compression algorithm of optimal wavelet packet compression. Aiming at the shortcomings of the wavelet soft and hard threshold function, a new threshold function is proposed for data denoise; and the new algorithm use of a correlation coefficient method to obtain the optimum wavelet base. Simulation indicates that the improved threshold function has stronger ability in keep high frequency of original signal than the original threshold function. Using improved threshold function denoising, wavelet packet compression can complete reconstruction signal. Compression and denoising algorithm has been preliminary applied to Yue yang power plant auxiliary equipment data compression. The algorithm plays an important role in save hard disk capacity, protect the hard disk and efficient data transmission.