A system and method for aerial video traffic analysis are disclosed. A particular embodiment is configured to: receive a captured video image sequence from an unmanned aerial vehicle (UAV); clip the video image sequence by removing unnecessary images; stabilize the video image sequence by choosing a reference image and adjusting other images to the reference image; extract a background image of the video image sequence for vehicle segmentation; perform vehicle segmentation to identify vehicles in the video image sequence on a pixel by pixel basis; determine a centroid, heading, and rectangular shape of each identified vehicle; perform vehicle tracking to detect a same identified vehicle in multiple image frames of the video image sequence; and produce output and visualization of the video image sequence including a combination of the background image and the images of each identified vehicle.