An analysis of the rate-distortion performance of an entropy-constrained block transform quantization scheme operating on first-order stationary Gauss-Markov sources is presented. Uniform threshold quantization is employed to quantize the transform coefficients. An algorithm for optimum stepsize (or, equivalently, entropy) assignment among the quantizers is developed and a simple asymptotic formula indicating the high-rate performance of the block transform quantization scheme is presented. Specific results determining the rate-distortion performance of the entropy-constrained block transform quantization scheme operating upon first-order Gauss-Markov sources are presented, and comparisons are made with the Huang and Schultheiss (1963) block transform quantization, vector quantization, and predictive quantization.>