Photoplethysmography (PPG) is one of the prime non-invasive vascular assessment methodology adopted in modern clinical practice. This paper proposes a modification of delta modulation for effective compression of PPG signal for real time measurements and monitoring applications. Based on the energy content and fluctuations, the PPG signal was windowed and categorized into 'complex' or 'plain' zones. The algorithm applies an adaptive hard thresholding, run length encoding and selective biasing of the first difference array based on zonal complexity. The final stage employs a selective nibble combination or offsetting rule for further compression. For performance assessment of the compression-decompression algorithms, PPG data was collected from fingers of healthy volunteers using Biopac Systems®. An average compression ratio of 3.84, percentage root mean square difference of 5.82 and percentage root mean square difference normalized of 7.57 were obtained with 20 sets of volunteers' data at 10 bit resolution and 125 Hz sampling. The decompressed data were clinically validated by Cardiologists. © 2015 IEEE.