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Interpolation is a very important and computational intensive part in H.264 video codec. Compared to full-pel motion estimation, "finer" interpolation provides better motion compensation performance at the expense of increased complexity. This paper presents a fast adaptive interpolation technique that significantly reduces the interpolation operation required in video coding. Experimental results on typical video sequence demonstrate that the proposed algorithm is able to achieve up to 45% encoding time reduction with no PSNR loss or bitrate increase.