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MPEG-2 video compression standard is wildly used in traditional digital video, while H.264 is a new generation video compression standard, which has higher code efficiency. In this paper, we proposed a novel fast mode selection algorithm for transcoding from MPEG-2 to H.264. Utilizing the CMT and DC factors obtained from MPEG-2 code stream, the proposed algorithm selects MacroBlcok model adaptively, and then finishes the progress of transcoding from MPEG-2 to H.264. The experimental study data shows the proposed fast mode selection algorithm has good performance for transcoding.