Can I use compression to improve RMI performance when transferring large datasets between the client and server?

Yes, you should be able to use the ZipInputStream and ZipOutputStream classes within a custom socket factory to give you a new socket type that transparently compresses data. For a tutorial on how to do this, including sample code, see: http://www.javaworld.com/javaworld/javaqa/2001-12/01-qa-1207-ziprmi.html?