Cooperative localization leverages noisy inter-node distance measurements and exchanged wireless messages to estimate node positions in a wireless network. In communication-constrained environments, however, transmitting large messages becomes problematic. In this paper, we propose an approach for communication-efficient cooperative localization that addresses two main challenges. First, cooperative localization often needs to be performed over wireless networks with loopy graph topologies. Second is the need for designing an algorithm that has low localization error while simultaneously requiring a much lower communication overhead. Existing methods fall short of addressing these two challenges concurrently. To achieve this, we propose a vector quantized message passing neural network (VQ-MPNN) for cooperative localization. Through end-to-end neural network training, VQ-MPNN enables the co-design of node localization and message compression. Specifically, VQ-MPNN treats prior node positions and distance measurements as node and edge features, respectively, which are encoded as node and edge states using a graph neural network. To find an efficient representation for the node state, we construct a vector quantized codebook for all node states such that instead of sending long messages, each node only needs to transmit a codeword index. Numerical evaluations demonstrates that our proposed VQ-MPNN approach can deliver localization errors that are similar to existing approaches while reducing the overall communication overhead by an order of magnitude.