In this paper, we propose a new deinterlacing algorithm based on motion estimation and compensation with variable block size. Motion compensated methods using a fixed block size tend to produce undesirable artifacts when there exist complicated motion and high frequency components. In the proposed algorithm, the initial block size of motion estimation is determined based on the existence of global motion. Then, the block is further divided depending on block characteristics. Since motion compensated deinterlacing may not always provide satisfactory results, the proposed method also use an intrafield spatial deinterlacing. Experimental results show that the proposed method provides noticeable improvements compared to motion compensated deinterlacing with a fixed block size.