MPEG-4 FGS is one of scalable video coding schemes specified In ISO/IEC 14496-2 Amendment 2, and particularly standardized as a scheme for providing fine granular quality and temporal scalabilities. In this paper, we propose a sign-bit reduction technique in embedded bit-plane coding to enhance the coding efficiency of MPEG-4 FGS system. The general structure of the FGS system for the proposed scheme is based on the standard MPEG-4 FGS system. The proposed FGS enhancement-layer encoder takes as input the difference between the original DCT coefficient and the decision level of the quantizer instead of the difference between the original DCT coefficient and its reconstruction level. By this approach, the sign information of the enhancement-layer DCT coefficients can be the same as that of the base-layer ones at the same frequency index in DCT domain. Thus, overhead bits required for coding a lot of sign information of the enhancement-layer DCT coefficients in embedded bit-plane coding can be removed from the generated bitstream. It is shown by simulations that the proposed FGS coding system provides better coding performance, compared to the MPEG-4 FGS system in terms of compression efficiency.