In a standard transform coding scheme of images or video, the decoder can be implemented by a table-lookup technique without the explicit use of an inverse transformation, In this new decoding method, each received code index of a transform coefficient addresses a particular codebook to fetch a component code vector that resembles the basis vector of the linear transformation. The output image is then reconstructed by summing a small number of nonzero component code vectors. With a set of well-designed codebooks, this new decoder can exploit the correlation among the quantized transform coefficients to achieve better rate-distortion performance than the conventional decoding method. An iterative algorithm for designing a set of locally optimal codebooks from a training set of images is presented. We demonstrate that this new idea can be applied to decode improved quality pictures from the bitstream generated from a standard encoding scheme of still images or video, while the complexity is low enough to justify practical implementation.