This thesis presents a new preconditioner for elliptic PDE problems on unstructured meshes. Using ideas from second generation wavelets, a multi-resolution basis is constructed to effectively compress the inverse of the matrix, resolving the sparsity vs. quality problem of standard approximate inverses. This finally allows the approximate inverse approach to scale well, giving fast convergence for Krylov subspace accelerators on a wide variety of large unstructured problems. Implementation details are discussed, including ordering and construction of factored approximate inverses, discretization and basis construction in one and two dimensions, and possibilities for parallelism. The numerical experiments in one and two dimensions confirm the capabilities of the scheme. Along the way I highlight many new avenues for research, including the connections to multigrid and other multi-resolution schemes.