A hybrid distributed video encoding method based on wavelet domain intra-frame mode decision capable of improving rate aberration performance, is characterized by the following steps: (1) a low complexity encoding, including the following steps: using traditional intra-frame encoder to code key frames, generating the reference frame of Wyner-Ziv frame by weighted average interpolation, generating a residual frame by a subtraction arithmetic, performing discrete wavelet switch DWT to the residual frame, generating a wavelet block, intra-frame mode decision of the wavelet block, entropy coding of the mode information, and inter-frame SW-SPIHT coding or intra-frame SPIHT coding of the wavelet block; (2) a high-complexity decoding, including the following: using traditional intra-frame decoding algorithm to decode key frames, adopting a motion estimation interpolation to produce side information frame of the Wyner-Ziv, generating the reference frame of the decoding terminal by weighting average interpolation, generating a residual frame of the decoding terminal by a subtraction arithmetic, performing DWT to the residual frame, entropy decoding of the mode information, adopting LBS to perform motion estimation to generate more accurate side information, fine reconstruction of wavelet coefficients, and recovering the original pixels by inverse discrete wavelet transform (IDWT) and addition operations.