The multiple grid(MG) chain code which uses four different square grids is proposed to encode line drawings. The main processes adopted in the code are: 1) a grid selection algorithm which allocates quantization points only to the vicinity of the course of a line drawing, 2) labeling rule on quantization points which makes the frequency of some codes larger than that of other codes, and 3) quantization points allocation-not to the corners, but to the sides of a square which makes the straight line segments larger without increasing quantization error. A performance comparison of various chain codes is made from the viewpoints of the encoding efficiency, naturalness of the encoded lines, and the rate distortion measure. Also, the superiority of the MG chain code to other codes is shown. At last, application of the MG chain code to the electronic blackboard system is explained.