We propose a motion compensated frame rate up-conversion (MC-FRC) algorithm adapting new block-based motion estimation (BME), which is overlapped block-based motion estimation (OBME), for frame rate up-conversion (FRC). Unlike conventional BME algorithms, where a video frame is divided into many non-overlapping square blocks of pixels, the proposed BME is executed using an overlapped matching block in order to get more accurate motion trajectory. To reduce computational complexity caused by the OBME, a sub-sampled pixel block is used for the OBME. Furthermore, in this paper, a modified MAD, which is weighted using the magnitude of MV that corresponds to the estimating position, is applied for the OBME. From the simulation results, the proposed methods show better performance in estimating "true motion" and reducing blocking artifacts with less complexity in calculation compared to a conventional method.