The compression of digital images has received wide attention of researchers since it reduces the memory, bandwidth and transmission requirements. One of the major drawbacks of the block-based DCT compression methods is that it may result in visible artifacts at block boundaries due to coarse quantization of the coefficients. This paper proposes a new post-filtering algorithm to remove coding artifacts in block-based DCT compressed medical images. The blocking artifact in the smooth and non-smooth regions are removed by modifying a few DCT coefficients while an edge preserving smoothing filter is applied to the intermediate region. Experimental results illustrating the performance of proposed method on the basis of PSNR and SF indices are presented and evaluated. Compared with other methods, the proposed one achieves better detail preservation and artifact removal performance with lower computational complexity.