In this paper, we propose a temporally adaptive three-dimensional subband coding (3D SBC) technique to effectively exploit the temporal activities in the input video. By using the rate- distortion performance measure, we show the optimal number of temporal subbands can be easily determined. The base temporal subband, which yields much concentrated energy, is encoded using H.261-like motion compensated discrete cosine transform technique. While in the higher temporal subbands, the two-dimensional adaptive wavelet packet bases are employed to exploit the various energy distributions, due to the moving components. In encoding the subbands, we employ adaptive scanning methods, followed by uniform step-size quantization with variable length coding, and coded/not-coded flag reduction technique based the quadtree structure. From the simulation results, the proposed 3D SBC provides about 0.29 to approximately 3.14 dB PSNR gain over the H.261 and the temporally fixed 3D SBC techniques.