A successive elimination algorithm for two-bit transform (2BT) based motion estimation (ME) is proposed. By mathematically deriving the lower bound for2BT-based matching criterion, we can discard the impossible candidates earlier and save computations substantially. Experimental results show that although the performance of the proposed algorithm is the same as that of the full search 2BT (FS-2BT) based ME algorithm, the computational complexity has been reduced significantly.