A fast intra/inter mode decision method using a risk-minimization criterion is proposed to reduce the encoder complexity of the H.264 encoder in this work. The current H.264 reference codes employ exhaustive search to find the best mode that optimizes the rate-distortion performance among all possible intra/inter predictive modes. To develop a fast binary mode decision scheme (i.e. either the inter- or intra-prediction mode to be used), we consider the risk of choosing the wrong predictive mode. If the cost of choosing the wrong mode in terms of the averaged rate-distortion (RD) performance loss is low, then the risk is tolerable. The fast algorithm consists of three steps. First, three features are extracted from the current macroblock to form a 3D feature vector. Second, the feature space is partitioned into three regions, i.e. risk-free, risk-tolerable, and risk-intolerable regions. Finally, depending on the location of the feature vector in the feature space, we can apply mechanisms of different complexities for the final mode decision. The proposed algorithm can select either the correct mode or the wrong mode but with low RD performance degradation. It is demonstrated by experimental results that the proposed algorithm can save approximately 19-25% of the total encoding time of H.264 (JM7.3a) with little degradation in the rate-distortion performance.