A wavelet-based video compression scheme that combines a tree coder and the multiresolution motion estimation (MRME) is presented in this paper. Based on the correlation between wavelet coefficients in interlevel subbands, tree coders outperform DCT-based transform coders for still images, especially at low bit rates. They also offer many advantages such as: (1) they support progressive transmission, (2) they have control over the bit rate, (3) they eliminate blocky artifacts and (4) their image quality degrades smoothly versus lowering bit rates. In addition, multiscale wavelet representation of an image facilitates the application of the coder in the video communication environment to satisfy quality and resolution requirements from video phones to HDTV. Using multiresolution representation of successive images in a sequence, MRME offers an effective fast algorithm for block-based motion estimation/compensation. Motion vectors between successive frames at the lowest resolution are used as the reference for motion estimation at higher resolutions. Choosing a smaller block size at a lower resolution and a smaller window size at a higher resolution can speed up the time-consuming computation for motion estimation. By arranging its roots, a block-based tree coder can be used for encoding areas that cannot be easily predicted. A simplified frame and block classification used in MPEG-1 are applied adaptively for different scenes and areas. Preliminary results show that this approach is effective in decreasing computational complexity and bit rate. Further optimization and expansion of the basic scheme can make it applicable for video transmission under various bandwidth limitations.