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A novel automatic target tracking (ATT) algorithm for tracking targets in forward-looking infrared (FLIR) image sequences is proposed in this paper. The proposed algorithm efficiently utilizes the target intensity feature, surrounding background, and shape information for tracking purposes. This algorithm involves the selection of a suitable subframe and a target window based on the intensity and shape of the known reference target. The subframe size is determined from the region of interest and is constrained by target size, target motion, and camera movement. Then, an intensity variation function (IVF) is developed to model the target intensity profile. The IVF model generates the maximum peak value where the reference target intensity variation is similar to the candidate target intensity variation. In the proposed algorithm, a control module has been incorporated to evaluate IVF results and to detect a false alarm (missed target). Upon detecting a false alarm, the controller triggers another algorithm, called template model (TM), which is based on the shape knowledge of the reference target. By evaluating the outputs from the IVF and TM techniques, the tracker determines the real coordinates of one or more targets. The proposed technique also alleviates the detrimental effects of camera motion, by appropriately adjusting the subframe size. Experimental results using real-life long-wave and medium-wave infrared image sequences are shown to validate the robustness of the proposed technique.