The H.264/AVC standard uses efficient inter prediction technologies improving the coding efficiency by reducing temporal redundancy between images. However, since H.264/AVC does not efficiently encode a video sequence that occurs a local illumination change, the coding efficiency of H.264/AVC is decreased when a local illumination change happens in video. In this paper, we propose an improved motion compensation using adjacent pixels and motion vector refinement to efficiently encode local illumination changes. The proposed method always improves the BD-PSNR (Bj$o$ntegaard Delta Peak Signal-to-Noise Ratio) of 0.01 ~ 0.21 dB compared with H.264/AVC.