Abstract In this paper, we propose a new distributed video coding (DVC) method, with hierarchical group of picture (GOP) structure. Coding gain of DVC can be significantly improved by enlarging GOP size for slow-moving frames. The proposed DVC decoder estimates a side information (SI) frame and transmits motion vectors (MVs) of the SI to the proposed encoder. Using the received MVs from the decoder, the proposed encoder can generate a predicted SI (PSI), which is the same as the SI in the decoder, and estimate the quality of PSI with minimal computational complexity. The proposed method decides the best coding mode among key, Wyner-Ziv (WZ), and skip modes, by estimating rate-distortion costs. Based on the selected best coding mode, the best GOP size can be automatically determined. As the GOP size is adaptively decided depending on the SI quality, entropy and parity bits can be effectively consumed. Experimental results show that the proposed algorithm is around 0.80 dB better in Bjøntegaard delta (BD) bitrate than an existing conventional DVC system.