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Effective shape coding in MPEG-4 requires a motion estimation (ME) procedure, which is a great burden for real-time encoders. This paper deals with fast ME for MPEG-4 shape coding. The proposed algorithm utilizes inherent properties of shape coding, i.e., coding based on motion vector predictor for shape (MVPS) and motion vector (MV) correlation between neighboring binary alpha blocks (BABs). By properly using these properties, the proposed algorithm can reduce a processing speed. In addition, the proposed algorithm can be combined with any conventional fast block matching algorithm (BMA) being used in texture ME and a bit-packing technique based on binary feature of shape information. Simulation results show that the proposed algorithm can reduce the computational complexity of ME for shape coding to 68.3% even in the worst case. Also, by simply combining the proposed algorithm with a fast BMA and a bit-packing technique, we can achieve the complexity suitable for real-time software implementation of MPEG-4 shape encoding.