diff --git a/src/main/java/com/ankhorage/eddy/compression/LZ77Compression.java b/src/main/java/com/ankhorage/eddy/compression/LZ77Compression.java
new file mode 100644
index 0000000..38af0d8
--- /dev/null
+++ b/src/main/java/com/ankhorage/eddy/compression/LZ77Compression.java
@@ -0,0 +1,103 @@
+package com.ankhorage.eddy.compression;
+
+public class LZ77Compression implements CompressionAlgorithm {
+
+    private static final int WINDOW_SIZE = 4096;
+    private static final int LOOKAHEAD_BUFFER_SIZE = 16;
+
+    @Override
+    public byte[] compress(byte[] data) throws CompressionException {
+        if (data == null) {
+            throw new CompressionException("Input data cannot be null");
+        }
+        if (data.length == 0) {
+            return new byte[0];
+        }
+
+        java.io.ByteArrayOutputStream compressed = new java.io.ByteArrayOutputStream();
+        int cursor = 0;
+
+        while (cursor < data.length) {
+            int bestOffset = 0;
+            int bestLength = 0;
+
+            int searchBufferStart = Math.max(0, cursor - WINDOW_SIZE);
+            int maxMatchLength = Math.min(LOOKAHEAD_BUFFER_SIZE, data.length - cursor - 1);
+            if (maxMatchLength < 0) {
+                maxMatchLength = 0;
+            }
+
+            for (int i = searchBufferStart; i < cursor; i++) {
+                int currentLength = 0;
+                while (currentLength < maxMatchLength && (cursor + currentLength) < data.length && data[i + currentLength] == data[cursor + currentLength]) {
+                    currentLength++;
+                }
+
+                if (currentLength > bestLength) {
+                    bestLength = currentLength;
+                    bestOffset = cursor - i;
+                }
+            }
+
+            byte nextByte;
+            if (bestLength > 0) {
+                 nextByte = data[cursor + bestLength];
+            } else {
+                 nextByte = data[cursor];
+            }
+
+            compressed.write((bestOffset >> 8) & 0xFF);
+            compressed.write(bestOffset & 0xFF);
+            compressed.write(bestLength);
+            compressed.write(nextByte);
+
+            cursor += bestLength + 1;
+        }
+
+        return compressed.toByteArray();
+    }
+
+    @Override
+    public byte[] decompress(byte[] data) throws CompressionException {
+        if (data == null) {
+            throw new CompressionException("Input data cannot be null");
+        }
+        if (data.length == 0) {
+            return new byte[0];
+        }
+        if (data.length % 4 != 0) {
+            throw new CompressionException("Invalid compressed data format: length must be a multiple of 4");
+        }
+
+        java.io.ByteArrayOutputStream decompressed = new java.io.ByteArrayOutputStream();
+        int cursor = 0;
+
+        while (cursor < data.length) {
+            int offset = ((data[cursor] & 0xFF) << 8) | (data[cursor + 1] & 0xFF);
+            int length = data[cursor + 2] & 0xFF;
+            byte nextByte = data[cursor + 3];
+
+            if (offset > decompressed.size()) {
+                throw new CompressionException("Invalid offset in compressed data: " + offset);
+            }
+
+            if (length > 0) {
+                int start = decompressed.size() - offset;
+                for (int i = 0; i < length; i++) {
+                    decompressed.write(decompressed.toByteArray()[start + i]);
+                }
+            }
+
+            decompressed.write(nextByte);
+
+            cursor += 4;
+        }
+
+        return decompressed.toByteArray();
+    }
+
+    @Override
+    public String getAlgorithmName() {
+        return "LZ77";
+    }
+}