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In this paper, a new low-complexity true-motion estimation (TME) algorithm is proposed for video processing applications, such as motion-compensated temporal frame interpolation (MCTFI) or motion-compensated frame rate up-conversion (MCFRUC). Regular motion estimation, which is often used in video coding, aims to find the motion vectors (MVs) to reduce the temporal redundancy, whereas TME aims to track the projected object motion as closely as possible. TME is obtained by imposing implicit and/or explicit smoothness constraints on the block-matching algorithm. To produce better quality-interpolated frames, the dense motion field at interpolation time is obtained for both forward and backward MVs; then, bidirectional motion compensation using forward and backward MVs is applied by mixing both elegantly. Finally, the performance of the proposed algorithm for MCTFI is demonstrated against recently proposed methods and smoothness constraint optical flow employed by a professional video production suite. Experimental results show that the quality of the interpolated frames using the proposed method is better when compared with the MCFRUC techniques.