Rate-Distortion optimization can significantly improve encoder performance in MPEG-like video coding applications especially when it is applied to coding mode selection and motion estimation. Nevertheless, it is not easy to implement Rate-Distortion optimization in real-time video encoders because of its prohibitive computational cost. In this paper, we propose a joint macroblock mode selection and motion estimation by employing a computationallyefficient, yet highly-effective rate-distortion model. Experimental results show that the proposed algorithm provides significant PSNR improvements with a small increase in overall computational load over the TM5-based encoder.