Traditional　fractal　video　compression　system　does　not　take　into　account　the　similarity　of　frame,　and　the　compression　ratio　is　not　very　high.　In　this　paper,　we　use　motion　compensation　to　deal　with　the　variation　of　image　frames　and　put　forward　a　new　compression　algorithm,　which　is　called　a　combinational　video　compression　algorithm　of　fractal　method　and　motion　compensation.　Experimental　results　show　that　this　method　can　obtain　a　much　higher　compression　ratio　compared　to　the　original　fractal　video　compression　and　achieve　higher　qualities　of　decompressed　images.