A parallel vector-quantization (VQ) processor has been developed aiming at real-time compression of motion pictures using a 0.35-μm triple-metal CMOS technology. The chip employs a new search algorithm for VQ encoding to reduce hardware volume. As a result, the die area of the chip is decreased to only 33% of that of conventional fully parallel design. This chip can handle 2048 template vectors by a single chip and is applicable to real-time compression of 30 frames/s full-color VGA (640 × 480 pixels) images. The chip operates at 33 MHz with power dissipation of 790 mW under 2.5-V power supply. A real-time motion picture compression system is demonstrated as an application of the chip. This system can transmit five full-color QVGA (320 × 240 pixels) images per second below 64 kb/s.