A stereo sequence coding algorithm is presented and evaluated in this paper. The left image stream is coded independently by an MPEG-type coding scheme. In the right image stream, only reference frames are coded by the subspace projection technique. The rest of frames in the right image stream are not coded and transmitted at the encoder; they are reconstructed from reference frames at the decoder. A frame estimation and interpolation technique is developed to exploit the great redundancy within stereo sequences to reconstruct some frames of the right image stream at the decoder. In the reconstructed frames, uncovered occlusions regions are filled by a disparity-based techniques. The intra coding and residual coding are based on subband coding techniques. The motion and disparity fields are estimated by block-based matching with a multiresolution structure, and coded by an entropy coding technique. Two stereo sequences are used to test our coding algorithm. Experimental results show that the frame estimation and interpolation technique works well perceptively and our stereo sequence coding scheme is effective to achieve high compression ratio.