Region based coding is an important feature in today’s image coding techniques as it follows different regions of the image will be encoded at different bit rates and hence at different qualities rather than encoding the entire image with a single quality constraints. This paper evaluates the features of using Shape Adaptive Wavelet Transform for the region based coding of the brain magnetic resonance images, in which the brain part will be encoded with more importance than the background. Shape Adaptive Discrete Wavelet Transform (SA-DWT) can transform the regions of interest and the background on the images independently and the coefficients can be encoded by using the SPIHT coding at different levels. This algorithm was compared with the existing wavelet based coding techniques and a better PSNR was achieved for the same bit rate by reconstructing the region of interest with high quality than the background.