In the video encoding system, motion estimation plays an important role at the front-end of encoder, which can eliminate inter redundancy efficiently and improve encoding efficiency. However, traditional motion estimation algorithm can’t be used in real-time application like video monitoring due to its computational complexity. In order to improve real-time efficiency, an improved motion estimation algorithm is proposed in this paper. The essential ideas consist of early termination rules, prediction of initial search point, and determination of motion type. Furthermore, our algorithm adopts different search patterns for certain motion activity. Experimental result shows that the improved algorithm reduces the computation time significantly while maintaining the image quality, and satisfies real time requirement in monitoring system.