A novel scheme for scalable video coding using three-band lifting-based motion-compensated transform is presented in this article. A series of flexible three-band motion-compensated lifting steps are used to implement the temporal wavelet transform, which provide improved compression performance by selecting specific motion model according to real video sequences, and offer higher temporal scalability flexibility by using three-band lifting steps. The experimental results compared with motion picture expert group (MPEG)-4 codec concerning standard video sequences demonstrate the effectiveness of the method.