In this paper, we propose extremum sampling, an activity-dependent scheme for sampling and encoding of vibration signals in a compressed form. Vibration signals are generally utilized for the condition monitoring of mechanical systems, including launch vehicles. With the highest frequency among all the other sensor outputs, enormous data is collected if vibration signals are sampled at the Nyquist rate, leading to complicated analysis. Besides, there is a limitation of the available bandwidth in launch vehicles and wireless nodes. Conventional data compression methods have to operate on all the samples acquired at the uniform rate, which increases the computational complexity at the transmitter. The proposed extremum sampling method is based on level-crossing sampling, and hence it has the inherent noise tolerance depending upon the value of the inter-level distance. A sample is taken at a level-crossing instant, if there is a change of direction of the signal compared to the direction at the previous level-crossing instant. Compared to compressedsensing, extremum sampling offers a simple method for the real-time acquisition and reconstruction of the signal. Excellent compression ratios have been achieved with minimal reconstruction errors. Since the method accomplishes compression during the sampling process itself, the additional burden at the transmitter for subjecting all the acquired samples to a compression algorithm is evaded. The generation of fewer samples results in the reduction of dynamic power consumption at the transmitter, memory, and bandwidth requirements.