We have developed a new digital image correlation (DIC) algorithm for non-contact, two-dimensional, whole-field displacement and strain measurement. Relative to existing algorithms, our algorithm substantially reduces the calculation expense by using neighborhood information while processing the data to determine the displacement field in a sub-region of interest. The new algorithm also uses higher-order interpolations of the displacement field, allowing for better accuracy in estimating strain distributions when the deformation field is non-homogeneous. Numerically-generated digital images are used to show that the new algorithm accurately reproduces the imposed displacement fields. The algorithm is also tested on actual images from deformed specimens from a variety of experiments, and shown to perform satisfactorily. / Singapore-MIT Alliance (SMA)