A method for video data stream integration and compensation includes using a discrete wavelet transform technique to compress and encode key frames of a video signal, and a discrete cosine transform technique to process interframe computations of the video signal, and automatically compensating and adjusting the video signal according to different factors. Since the key frames are not likely to be distorted when processed using discrete wavelet transform, and since the use of discrete cosine transform to process interframe computation facilitates realization of high-speed computations and permits fine macroblock computations, the reception quality of the video signal can be maintained.