For the diagnosis of gastrointestinal (GI) tract diseases, a new type of JPEG-based swallowable wireless capsule endoscope (CE) has been developed, which is 12 mm in diameter and 28 mm in length and has the ability to take 320 × 240 resolution images, compress them into JPEG form, and transmit the compressed images. In vitro experiments, the CE produced clear digital JPEG images of the small intestine of pig. Each picture is approximately15k and the images are clear, which will help to improve the diagnosis rate of GI tract diseases. With a frame frequency of 2 frames per second, the CE kept working reliably for five hours. Results of the experiments in this paper reveal that the JPEG form of images is more suitable for wireless transmission than the traditional Bayer form.