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The new video coding standard, H.264/MPEG-4 AVC, uses variable block sizes ranging from 4×4 to 16×16 in interframe coding. This new feature has achieved significant coding gain compared to coding a macroblock (MB) using fixed block size. However, this feature results in extremely high computational complexity when brute force rate distortion optimization (RDO) algorithm is used. This paper proposes a fast intermode decision algorithm to decide the best mode in intercoding. It makes use of the spatial homogeneity and the temporal stationarity characteristics of video objects. Specifically, spatial homogeneity of a MB is decided based on the MB's edge intensity, and temporal stationarity is decided by the difference of the current MB and it colocated counterpart in the reference frame. Based on the homogeneity and stationarity of the video objects, only a small number of intermodes are selected in the RDO process. The experimental results show that the fast intermode decision algorithm is able to reduce on the average 30% encoding time, with a negligible peak signal-to-noise ratio loss of 0.03 dB or, equivalently, a bit rate increment of 0.6%.