Visualization of time-varying volumetric data sets, which may be obtained from numerical simulations or sensing instruments, provides scientists insights into the detailed dynamics of the phenomenon under study. This paper describes our study of a coherent solution based on quantization coupled with octree and difference encoding, and adaptive rendering for efficient visualization of timevarying volumetric data. Quantization is used to attain voxel-level compression and may have a significant influence on the performance of the subsequent encoding and visualization steps. Octree encoding is used for spatial domain compression, and difference encoding for temporal domain compression. In essence, neighboring voxels may be fused into macro voxels if they have similar values, and subtrees at consecutive time steps may be merged if they are identical. The software rendering process is tailored according to the tree structures and the volume visualization process. With the tree representation, selective rendering may be performed very efficiently. Additionally, the I/O costs are reduced. With these combined savings, a higher level of user interactivity is achieved. We have studied a variety of time-varying volume data sets, performed encoding based on data statistics, and optimized the rendering calculations wherever possible. Preliminary tests on workstations have shown in many cases tremendous reduction by as high as 90% in both storage space and inter-frame delay when compared to direct rendering of the raw data.