In this paper, we propose a motion vector search algorithm that employs the Sum of Absolute Difference (SAD) minimization in DCT domain as a distortion measure. In addition, block based motion estimation is carried out with multiple modes in this frequency domain, and a mode is selected according to the Lagrangian cost function [1, 2, 3]. Four modes are designed. The first two modes are a mode with 1 motion vector (INTER1V) and a mode with 4 motion vectors (INTER4V) per macroblock that are similar to the H.263 . The last two modes use 4 motion vectors per macroblock (INTER1V+) or per block (INTER4V+), where the 8×8 DCT coefficients are firstly separated into 4 groups and a motion vector is independently assigned to each group. The average SNR (Signal to Noise Ratio) gains between 0.3 and 1.0dB are obtained for tested sequences when compared with TMN. Our proposal method provides true motion vectors for low frequency and minimizes distortion for higher frequency. Therefore our proposed method also reduces subjective visual degradation.