In this paper, we propose a variable step search fast motion estimation algorithm using local statistics of neighboring motion vectors. Using the degree of correlation between neighboring motion vectors, motion search range of each macroblock is adaptively adjusted to reduce unnecessary search points. Based on the determined search range, motion vector is obtained by variable step search step. Experimental results show that comparing to fast full spiral search, fixed step, and fast variable block size motion estimation algorithms, the motion search points and computing time of proposed algorithm are dramatically reduced with acceptable loss in coding performance.