A compressed dynamic image encoding device that is: operable to generate a motion vector by searching a reference image read from a frame memory for an image area most similar to an image area of a video input signal to be encoded; operable to generate a motion-compensated reference image as a predicted image, from the motion vector and the reference image read from the frame memory; operable to generate a prediction residual, by subtracting the motion-compensated reference image from the video input signal to be encoded; operable to generate the reference image to be stored in the frame memory, by adding the motion-compensated reference image and the result of processing of orthogonal transform, quantization, inverse quantization, and inverse orthogonal transform performed to the prediction residual; and operable to generate an encoded video output signal by the processing of orthogonal transform, quantization, and variable-length encoding performed to the prediction residual, wherein the reference image comprises on-screen reference images in an on-screen reference image area (INSIDE OF SCREEN) located inside a video display screen, and an off-screen reference image in an off-screen reference image area (OUTSIDE OF SCREEN) located outside the video display screen, and wherein the on-screen reference images comprise a plurality of starting on-screen reference images, wherein an extended straight line (L1, L2, L3) exists between the off-screen reference image and each of the plurality of starting on-screen reference images, wherein a similarity of the plurality of on-screen reference images arranged on the extended straight line (L1, L2, L3) is calculated for each of the plurality of extended straight lines (L1, L2, L3), and; wherein image information of the off-screen reference image is generated on the basis of image information of the plurality of on-screen reference images arranged on the extended straight line (L1, L2, L3) with the highest degree of similarity. operable to generate a motion vector by searching a reference image read from a frame memory for an image area most similar to an image area of a video input signal to be encoded; operable to generate a motion-compensated reference image as a predicted image, from the motion vector and the reference image read from the frame memory; operable to generate a prediction residual, by subtracting the motion-compensated reference image from the video input signal to be encoded; operable to generate the reference image to be stored in the frame memory, by adding the motion-compensated reference image and the result of processing of orthogonal transform, quantization, inverse quantization, and inverse orthogonal transform performed to the prediction residual; and operable to generate an encoded video output signal by the processing of orthogonal transform, quantization, and variable-length encoding performed to the prediction residual, wherein the reference image comprises on-screen reference images in an on-screen reference image area (INSIDE OF SCREEN) located inside a video display screen, and an off-screen reference image in an off-screen reference image area (OUTSIDE OF SCREEN) located outside the video display screen, and wherein the on-screen reference images comprise a plurality of starting on-screen reference images, wherein an extended straight line (L1, L2, L3) exists between the off-screen reference image and each of the plurality of starting on-screen reference images, wherein a similarity of the plurality of on-screen reference images arranged on the extended straight line (L1, L2, L3) is calculated for each of the plurality of extended straight lines (L1, L2, L3), and; wherein image information of the off-screen reference image is generated on the basis of image information of the plurality of on-screen reference images arranged on the extended straight line (L1, L2, L3) with the highest degree of similarity.