In scalable video coding (SVC), an exhaustive mode decision is performed to search for the best mode at each macroblock. Although this method achieves an optimal trade-off between rate and distortion, it introduces an extreme computational burden on the encoder. In this letter, we propose a fast mode decision algorithm that can reduce the computational load of the mode decision for SVC. We statistically derive the expectation of the rate-distortion cost (RDcost) increase caused by skipping each mode in the mode decision. In the proposed algorithm, the encoder performs the mode decision using a small number of modes that are determined based on the expected increase of the RDcost. Experimental results show that the proposed algorithm can reduce the computational complexity significantly with negligible video quality degradation and bitrate increment.