The greatest advantage gained from hyperspectral imagery is that narrow spectral features can be used to give more information about materials than was previously possible with broad-band multispectral imagery. For many applications, the new larger data volumes from such hyperspectral sensors, however, present a challenge for traditional processing techniques. For example, the actual identification of each ground surface pixel by its corresponding reflecting spectral signature is still one of the most difficult challenges in the exploitation of this advanced technology, because of the immense volume of data collected. Therefore, conventional classification methods require a preprocessing step of dimension reduction to conquer the so-called curse of dimensionality. Spectral data reduction using wavelet decomposition could be useful, as it does not only reduce the data volume, but also preserves the distinctions between spectral signatures. This characteristic is related to the intrinsic property of wavelet transforms that preserves high- and low-frequency features during the signal decomposition, therefore preserving peaks and valleys found in typical spectra. When comparing to the most widespread dimension reduction technique, the Principal Component Analysis (PCA), and looking at the same level of compression rate, we show that Wavelet Reduction yields better classification accuracy, for hyperspectral data processed with a conventional supervised classification such as a maximum likelihood method.