In this paper, We present an efficient three-dimensional wavelet transform (3D-WT) algorithm for video compression. This algorithm performs the temporal decomposition of a video sequence in a more efficient way than the classical 3D-WT algorithm. We have conducted a set of experimental evaluations of the proposed algorithm using various video sequences. Experimental results show that our algorithm exhibits lower memory demands and lower latencies for the compression and decompression processes than the classical algorithm at the same compression ratio. © 2001 IEEE.