The effect of fiber loss on the quality of soliton-effect picosecond pulse compression is analyzed by solving the modified nonlinear Schrodinger equation numerically. The results show that fiber loss affect the performance of soliton-effect pulse compressors both qualitatively and quantitatively. The compressed pulse is longer with a lower peak power and a poorer pulse quality when fiber loss is taken into account. Furthermore, the optimum fiber length for maximum compression is longer than that expected in the absence of fiber loss. The effect of fiber loss on compression quality relates not only to the initial peak power but also to the initial pulse width.