Rate control is a key technology in the fields of video coding and transmission, and it has attracted a great attention and has been studied extensively. The TM5 framework of MPEG-2 is a classical rate control algo-rithm and has being widely used. However, it has some underlying drawbacks during practical applications such as the poor rate control precision and high computational complexity. Hence, in this paper, a novel rate-control algorithm based on the TM5 framework is proposed. The drawback of the target bit allocation method of the original TM5 algorithm is firstly analyzed and improved. Then, a new rate-distortion model is incorporated into the rate control algorithm to implement rate prediction to enhance the rate-control precision. Meanwhile, the macro-block (MB) level rate control is adapted to be frame level to reduce the computational complexity. Experiments are conducted and some results are given. Compared with the original TM5 algo-rithm, the improved novel algorithm not only can enhance the rate-control precision but also can reduce the complexity and the fluctuation of decoded image quality.