In this study, we propose a simple, highly efficient intra skip decision algorithm to reduce the computational complexity of H.264/AVC coding. It utilizes information such as the best mode and the rate value of the RD cost function, which are all pre-calculated. These values are calculated in the corresponding macroblock (MB) of the previous frame and the neighbouring MBs of the current frame in order to develop an intra skip decision rule. Our experimental results demonstrated that without the additional time-consuming computation, the proposed algorithm reduces encoding time by approximately 50% compared with the time needed for an exhaustive search and it significantly increases the time saving by 17%-30% compared with the existing algorithms. In addition, our experimental results showed that the differences in peak signal-to-noise ratio degradation are negligible and the bit rate increment is minimal.