A panoramic annular lens system (PAL), a unitary video camera and a PC-based software system that unwraps a 360° video image into a seamless, distortion free horizontal image image in real time. The PAL system of the preferred embodiment has a 360° horizontal field of view and a 90° vertical field of view in a 40 mm diameter compact package. The invention is not limited to any particular type of lens system. In fact, there are numerous lens systems for providing a 360° panoramic view. The video camera may be a CCD or CMOS based device having a pixel resolution of either 1280×1024 (high resolution) or 720×480 (NTSC). The unwrapping system is a radiometric ray tracing program carried out using a computer's graphics card capabilities to produce highly efficient regional transformation while minimizing software overhead. The result is real time, high resolution 30 fps conversion from a spherical distorted image to a flat panoramic image in Cartesian coordinates.