This paper proposed a new algorithm of data compression for ambulatory ECG, where no distortion was included in the reconstructed signal, templates were constructed selectively from detected beats, and categorized ECG morphologies (templates) could be displayed in decoding the compressed data. This algorithm consisted of subtracting a best-fit template from the detected beat with an aid of multi-template matching, first differencing of the resulting residuals and modified Huffman coding. This algorithm was evaluated by applying it to ECG signals of the American Heart Association (AHA) data base in terms of bit rates. Following features were indicated. (1) Decompressed signal coincided completely with the original sampled ECG data. (2) Bit rate was approximately 800 bps at the appropriate threshold 50-60 units (1 unit2.4µVolt) for the template matching. This bit rate was almost the same as that of the direct compression (encoding the first differenced signal of original signal). (3) The decompressed templates could make it easy to classify the templates into the normal and abnormal beats; this could be executed without fully decompressing the ECG signal.