Motion estimation techniques are widely used in today's video processing systems. The most frequently used techniques are the block matching method and the differential method. In this paper, we have studied this topic from a viewpoint different from the above to explore the fundamental limits and tradeoffs in image motion estimation. The underlying principles behind two conflict requirements in motion estimation, accuracy and ambiguity, become clear when they are analyzed using this tool—frequency component analysis. This analysis also suggests new motion estimation algorithms and ways to improve the existing algorithms. The so-called frequency component motion estimation algorithm is thus proposed. Compared to the conventional block matching and phase correlation algorithms, this approach provides more reliable displacement estimates particularly for the noisy pictures.