We are intended to propose a video compression based on Modified Pixel-Based Motion Estimation (MPME) motion estimation technique is conducted on a pixel-by-pixel basis and the predicted P-frame has been developed using motion estimation technique. The residual is calculated with the original P-frame and the predicted P frame, and the residual is passed into next phase. After the motion vector estimation each frame is encoded by using JPEG-LS encoder. Next the encoded values of compressed video frames are decoded by using the decoding technique and for that JPEG-LS decoder is used.The proposed video compression using MPME will be implemented in the platform MATLAB and the performance of the video codec procedure is assessed by contrasting the consequence of proposed system with the conventional motion estimation algorithms.