Abstract: A method that allows the real-time replacement of the designated background portion of an incoming video signal with an alternate background. The method utilizes the actual background image for reference as the basis for determining the background and foreground elements within the image with the end result being comparable to traditional blue-screen processes, such as chroma-key and ultimate technology, but requiring only a personal computer, video camera and the software. In this case, however, the reference background image can be any reasonably static scene with a sufficient and stable light source captured by the camera. The video data stream is modified in real-time by comparisons against the reference background image and is then passed on to its original destination. Multiple signal-noise processing algorithms are applied in real-time against the signal to achieve a visually acceptable matte.