We propose a fast macroblock (MB) mode prediction and decision algorithm based on temporal correlation for P-slices in the H.264/AVC video standard. There are eight block types for temporal decorrelation, including SKIP mode based on rate-distortion (RD) optimization. This scheme gives rise to exhaustive computations (search) in the coding procedure. To overcome this problem, a thresholding method for fast inter mode decision using a MB tracking scheme to find the most correlated block and RD cost of the correlated block is suggested for early stop of the inter mode determination. We propose a two-step inter mode candidate selection method using statistical analysis. In the first step, a mode is selected based on the mode information of the co-located MB from the previous frame. Then, an adaptive thresholding scheme is applied using the RD cost of the most correlated MB. Secondly, additional candidate modes are considered to determine the best mode of the initial candidate modes that does not satisfy the designed thresholding rule. Comparative analysis shows that a speed-up factor of up to 70.59% is obtained when compared with the full mode search method with a negligible bit increment and a minimal loss of image quality.