A multimedia device and a motion compensation method thereof are provided for generating a middle frame between two frames. The multimedia device includes an interpolation unit, a linear process unit and a combination unit. The interpolation unit generates a first reference pixel data according to the relationship among a first pixel data, a second pixel data, and a third pixel data. The first and the second pixel data are obtained according to the location of a to-be-generated pixel and a relative motion vector. The third pixel data is obtained according to the two pixels data. The linear process unit provides a linear combination of the first and the second pixel data to generate a second reference pixel data. The combination unit combines the two reference pixel data according to the difference between the first and the second pixel data to generate a pixel data for the to-be-generated pixel.