Fractal encoding technique possesses some particular properties which make it as an attractive approach to video sequences compression. In this paper, we propose a novel fractal based encoding method for video signals, which, based on Self Transformation Systems( STS ), is combined with Motion Compensation as well as nonlinear transformation. Experiment of results of realtime image sequences show that the proposed method can achieve a very fast encoding speed and acceptable tradeoff between compression ration and decoding quality. Fractal encoding technique possesses some particular properties which make it as an attractive approach to video sequences compression. In this paper, we propose a novel fractal based encoding method for video signals, which, based on Self Transformation Systems (STS), is combined with Motion Compensation as well as nonlinear transformation. Experiment of results of realtime image sequences show that the proposed method can achieve a very fast encoding speed and acceptable tradeoff between compression ration and decoding quality.