The NEAR (near Earth asteroid rendezvous) spacecraft was launched on February 17, 1996 for subsequent orbit insertion about the asteroid Eros. During the approach and preliminary flyby prior to the insertion, a continuous series of images will be taken of a region within a few hundred kilometers of Eros. These images will be processed to detect the presence of small orbiting moonlets which could seriously affect the safety and orbit stability of the spacecraft. These moonlets would, of course, also be of great interest to astronomers and space physicists. This paper discusses the image processing and motion discrimination (track processing) techniques that will be applied to the time series of images and reviews the NEAR Eros encounter simulation used for the development of these algorithms. Image processing techniques include frame registration, background detrending, object detection, feature extraction for both point and extended sources, and preliminary object classification. Motion discrimination algorithms include pattern matching of observations, kinematic tracking of observations via proximity gating, removal of observations determined as stars, inertial velocity estimation of moving objects, and final moonlet classification. The simulation models a variable number of synthetic moonlets, Eros orbit and kinematics, an 80,000-plate shape model of the rotating Eros, spacecraft orbit and attitude, solar illumination, star catalog, and imaging sensor characteristics.