In this paper, we present a region-of-interest-based video coding system for use in real-time applications. Region-of-interest (ROI) coding methodology specifies that targets or ROIs be coded at higher fidelity using a greater number of available bits, while the remainder of the scene or background is coded using a fewer number of bits. This allows the target regions within the scene to be well preserved, while dramatically reducing the number of bits required to code the video sequence, thus reducing the transmission bandwidth and storage requirements. In the proposed system, the ROI contours can be selected arbitrarily by the user via a graphical user interface (GUI), or they can be specified via a text file interface by an automated process such as a detection/tracking algorithm. Additionally, these contours can be specified at either the transmitter or receiver. Contour information is efficiently exchanged between the transmitter and receiver and can be adjusted on the fly and in real time. Coding results are presented for both electro-optical (EO) and infrared (IR) video sequences to demonstrate the performance of the proposed system.