This dissertation deals with (a) fine granularity video compression technique and (b) its application to robust video transmission over wireless Internet. First, two wavelet-domain motion estimation algorithms, HMRME (Half-pixel Multi-Resolution Motion Estimation) and HSDD (Hierarchical Sum of Double Difference Metric), have been proposed to give wavelet-based FGS (Fine Granularity Scalability) video encoder with either low-complexity or high-performance features. Second, a VLSI-friendly high-performance embedded coder ABEC (Array-Based Embedded Coder) has been built to encode motion compensation residue as bitstream with fine granularity scalability. Third, the analysis of loss-rate prediction over Gilbert channel with loss-rate feedback, and several optimal FEC (Forward Error Correction) assignment schemes applicable for any real-time FGS video transmission system will be presented in this dissertation. In addition to those theoretical works mentioned above, for future study on embedded systems for wireless FGS video transmission, an initiative FPGA-based MPEG-4 video encoder has also been implemented in this work.