In this paper, an algorithm for moving region detection in compressed video is developed. It is assumed that the video can be compressed either using the Discrete Cosine Transform (DOT) or the Wavelet Transform (WT). The method estimates the WT of the background scene from the WTs of the past image frames of the video. The WT of the current image is compared with the WT of the background and the moving objects are determined from the difference. The algorithm does not perform inverse WT to obtain the actual pixels of the current image nor the estimated background. In the case of DOT compressed video, the DC values of 8 by 8 image blocks of Y, U and V channels are used for estimating the background scene. This leads to a computationally efficient method and a system compared to the existing motion detection methods. © Springer-Verlag 2004.