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The motion estimation process and coding mode selection are responsible for a large portion of the computational effort in H.264-based video encoding systems optimized for rate-distortion (RD). This paper presents a rate sorting and truncation strategy that incorporates the RD optimization criterion in the decision to evaluate distortion for both motion vectors and coding modes. Experimental results confirm the effectiveness of the proposed approach, yielding up to a 90% reduction in the computational complexity. An additional saving can also be obtained, with insignificant RD performance loss, by using a quality threshold.