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Although the overdrive technique is one of the most effective techniques for reducing motion blur artifact in liquid crystal displays (LCD), it requires considerable frame memory (more than one frame). Artifacts can be reduced significantly when more frames are used for overdrive technology. This paper introduces a new and efficient dynamic capacitance compensation (DCC) system to reduce motion blurring as well as other artifacts, such as overshoot and rising bounce using 3 frames. The main idea of the proposed system is to use 3 frames using motion estimation for the overdrive of a 120Hz Full-HD LCD panel. To evaluate the performance of the proposed method, the quantitative measures were defined in terms of the peak signal-to-noise (PSNR) and data reduction ratio. The experimental results showed that proposed algorithm could reduce data size significantly (~90%), and the resulting images had sufficient quality (average 34.68dB) for overdrive in the LCD panel. Therefore, the proposed approach can be a useful tool for reducing the frame data size of the LCD overdrive technique as well as artifacts, such as motion blurring, overshoot and rising bounce.