This article presents a complete video codec which supports both block-based and mesh-based motion compensation modes. While the mesh-based modes are suitable for spatially continuous representation of in-plane rotations, zooms, and other motions that can be represented by parametric mappings, the block-based modes (especially overlapped block matching) perform better around motion boundaries. Therefore, a hybrid codec with block-based and mesh-based modes, which nicely complement each other, yields the best results over a wide range of video at low bit rates. Experimental results with MPEG-4 test sequences are shown to demonstrate the performance of the proposed hybrid codec. © 1998 John Wiley & Sons, Inc. Int J Imaging Syst Technol, 9, 248–256, 1998