A system for compressing and packing pipe insulation includes a compression member that is movable along a first axis to compress pieces of pipe insulation. A stacking bay includes opposing walls that are spaced apart from one another. At least one of the two opposing walls is movable relative to the other of the two opposing walls along a second axis to adjust a lateral distance between the opposing walls to accommodate an increasing size of the pieces of pipe insulation along the second axis. The first axis is generally orthogonal to the second axis. A packing member that applies a force along a third axis to the pieces of pipe insulation after being compressed. The third axis is generally orthogonal to the first and second axes. The first axis is generally orthogonal to the second axis. The compression member is aligned with a space formed between the opposing walls.