A method of perceptually quantizing a block of an image or video sequence includes generating a non-perceptibility of distortion value. The non-perceptibility of distortion value is calculated from one or more masking values, e.g., complexity, brightness, movement, etc., which themselves are respectively calculated from previously reconstructed samples associated with the image or video sequence. The reconstructed samples form one or more causal templates that are used to calculate such masking effects and, thus, the non-perceptibility of distortion value. The perceptual quantization method then includes generating a quantization step size value which is a function of the non-perceptibility of distortion value. Since templates consisting only of previously reconstructed samples are used to derive the quantization step size value, the templates used at the encoder are also available at the decoder. As a result, an encoder does not need to provide quantization-related information to the corresponding decoder since the decoder can get the information using the same causal templates as those used at the encoder.