—The coding performance can be further improved when the hierarchical B-picture coding is introduced into H.264/AVC. However, the existing rate control schemes can NOT work efficiently in such new coding framework. This paper proposes a novel rate control algorithm when hierarchical Bpicture coding is used in H.264/AVC. Firstly, a set of scalingfactors applied in designing cascaded quantizer for the B frames at different temporal levels is introduced. Based on the designed scaling-factors, an efficient bit-allocation strategy for hierarchical B-picture coding is presented. The experiments show that the proposed rate control algorithm can further improve PSNR up to 0.7dB compared to the existing hierarchical B-picture coding in H.264/AVC, while the mismatch of target bit rate and real bit rate does not exceed 2%.