New methods for both color palette design and dithering based on HVS (human visual system) characteristics are proposed. Color quantization for palette design uses the sensitivity and spatial masking effect of HVS. Dithering operation for printing uses nonlinear quantization which considers overlapping phenomena of neighboring printing dots and modified dot diffusion algorithm is followed to compensate the degradation produced in the quantization process. The proposed techniques can produce high quality image in the low bit color devices.