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The newest international video-coding standard H.264/AVC significantly achieves better coding performance compared to prior video coding standards such as MPEG-2, which has been widely used in today's digital video applications. To provide the interoperability between MPEG-2 and H.264/AVC, in this paper we propose an efficient cascaded mode decision for MPEG-2 to H.264/AVC intra frame transcoding, which is accomplished in two stages. In the first stage, the low-frequency AC components of discrete cosine transform (DCT) block of a MB is used to select I4MB or I16MB mode prediction; while in the second stage sum of absolute Hadamard transform differences (SATD) coefficients, including SATD value and its variance, is used to skip improper modes for rate distortion optimization (RDO) mode decision. The experimental results, conducted on JM12.2 with fast C8MB mode decision, reveal that over 49% of computation time on average can be saved, while preserving good coding performance when compared with complex cascaded pixel domain transcoding (CCPDT); or 85% (a speed up factor of 7) when compared with CCPDT without considering fast C8MB. The coding performance is also compared with two other distinct algorithms, and the results demonstrate that the proposed algorithm momentously outperforms these two algorithms in all three respects (PSNR), bit rate as well as computation time.