Abstract— Video compression techniques have been derived to decrease high bit rate. Their possibility to perform this task is quantified by the compression ratio. This compression increasing degradation of the video. Utilizes two basic compression techniques, interframe compression ,compression between frames, designed to minimize data redundancy in successive, intraframe compression occurs within individual frames, designed to minimize the duplication of data in each video. We present an image enhancement algorithm called retinex which can be used on frames of the video in order to enhance the video as a whole. This step can be used as a preprocessor to H264 and all the frames can be enhanced using this algorithm and then compression can be performed.