Coding a current block using multi-level compound predictor is disclosed. A method includes generating a first compound predictor by combining at least two predictor blocks for the current block, generating a second predictor for the current block, and combining the first compound predictor and the second predictor to obtain a prediction block for encoding or decoding the current block. An indicator may be sent from the encoder to the decoder to indicate when multi-level compound prediction is used to encode a block.