|The vehicle is one of the important means of transportation. With the fast economic growth and the improvement of people’s living standards, there are more and more vehicles on road. Tranffic accidents happen frequently due to the quick rise of vehicles and other unsafe factors. So video image processing is researched by utilizing DSP technology, MPEG-4 compression algorithm and modern electronic technology in system for monitoring vehicles’ outside environment.On the base of the analysis of XVID video encoding algorithm, taking the fixed chip ADSP-BF533 in Blackfin seriese of ADI Company, optimizing design, including structure characters, resources allocation, debugging of DSP, is discussed to implementation. A practical DSP optimizing design method is introduced, using C code to implement encoder at first, and then utilizing assembler to optimize and revise the module which is one of the most impacts on encoder’s performance regarding the character of DSP and the result from quantitive analysis of algorithm.Based on the system design project, ADSP-BF533 is adopted to design system hardware, including modules such as, image acquisition, video encoding and decoding, SDRAM and FLASH memory, USB interface, power and reset; the system software consists of main program, XVID compression and decompression, USB memory and interrupt service program. Besides, hardware & software debugging and running debugging are carried on. Results show that the system achieves function, performance and realtime requirement.The system has large-capacity video storage, compression and replay function, which can provide realtime record. The system has simple structure, less cost high reliability, strong transportability and expandability. It can be not only used for monitoring vehicles but also widely applied in other fields such as finance, traffic, building, public squares and communities. It has comprehensive application fields.