Things You'll Need
Instructions
Download and install PSP ISO Compressor (see Resources). This is a free program, and it is a one-of-a-kind piece of software.
Open PSP ISO Compressor and click "Compress ISO->CSO" from the left side of the program's main menu.
Click the "Input File(s)" button and a new window will appear. Select your PSP ISO from the explorer window and click "OK" to load it into the program.
Click the "Output File(s)" button, select a place where you want to save the CSO file and click "OK." Click "Compress" on the bottom of the main program window and the PSP game image will be reduced in size while retaining its playability.