The basic components of an MPEG system include elementary streams (the raw audio, data or video media), program streams (a group of elementary streams that make up a program) and transport streams that carry multiple programs.

This figure shows the basic operation of an MPEG system. This diagram shows that the MPEG system allows multiple media types to be used (voice, audio and data), codes and compresses each media type, adds timing information and combines (multiplexes) the media channels into a MPEG program stream. This example shows that multiple program streams (e.g. television programs) can be combined into a transport channel. When the MPEG signal is received, the program channels are separated (demultiplexed), individual media channels are decoded and decompressed and they are converted back into their original media form.