ThenewH.264videocodingstandardachievessignificantlyhighercompressionperformancethanMPEG-2.AstheMPEG-2ispopularindigitalTV,DVD,etc.,bandwidthormemoryspacecanbesavedbytranscodingthosestreamsintoH.264intheseapplications.Unfortunately,thehugecomplexitykeepstranscodingfrombeingwidelyusedinpracticalapplications.Thispaperproposesanefficienttranscodingarchitecturewithasmartdownscalingdecoderandafastmodedecisionalgorithm.Usingtheproposedarchitecture,hugebufferingmemoryspaceissavedandthetranscodingcomplexityisreduced.Performanceoftheproposedfastmodedecisionalgorithmisvalidatedbyexperiments.