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ISO/IEC Motion Picture Experts Group (MPEG) and ITU-T Video Coding Experts Group (VCEG) have collaborated for development of new international video coding standard with high coding efficiency and network friendly video representation features. In 2003, JVT (collaboration group of MPEG and VCEG) published international standard H.264/MPEG-4 AVC which is the state of the art video coding technology. Several major technical progresses including precise fractional-pel displacement vector resolution with pre-fixed interpolation filter let H.264/MPEG-4 AVC have superior video coding efficiency compared to the previous standards such as MPEG-4, H.263 and etc. For recent years, many researches on interpolation filter for fractional-pel displacement vector have shown possibility for further improvements of video coding efficiency. Most investigations are on improvement of pre-fixed interpolation filters by transmitting texture dependent interpolation filter coefficients to decoder side. In this paper, we introduce a new approach for improvement of pre-fixed interpolation filter without transmitting filter information to decoder side, named as local interpolation filter estimation (LIFE). For generation of prediction signalwith fractional-pel displacement vector, a local interpolation filter is estimated by exploitation of previously decoded spatial neighboring texture. Experimental results showed that we could get about 2 13% bit saving with LIFE compared to H.264 High Profile low delay condition.