Abstract. H.264 provides various useful features such as improved coding efficiency and error robustness. These features enable mobile device to adopt H.264/AVC standard to achieve effective video communications. However, the encoder complexity is greatly increased mainly due to motion estimation (ME) and mode decision. We implemented a realtime H.264 encoding system based on DSP and FPGA chip using the propose scheme to jointly optimize inter mode selection and ME using the multi-resolution analysis. In our paper, we focus on reducing the complexity while maintaining the visual quality output. Experimental results show that the proposed algorithm is over 3 times faster than the existing method while maintaining the coding efficiency and the implemented system. The implemented H.264 encoder meets the common requirement of the real-time video coding [30 frames/sec]. Keyword: H.264, inter mode decision, motion estimation, MRME, mobile video communication.