Abstract: An encoder implements a residual-free palette encoding mode in which a block of pixels is used to derive a palette table having a number of palette colors less than a number of pixel colors in the block of pixels, and to derive a color map representing each pixel of the block with a corresponding index number associated with a palette color that most closely matches the pixel's color. The calculations of residuals representing errors between the predicted palette colors and the actual pixel colors are omitted during the encoding process, thereby facilitating implementation of less complex palette mode encoder hardware at the expense of slight loss of color accuracy. Moreover, when multiple encoding modes are available, the encoder can employ the residual-free palette encoding mode when the rate-distortion cost or other cost of using this mode is determined to be the lowest cost of the plurality of encoding modes.