This paper proposes a new approach to improve the coding performance of intra block coding in H.264/AVC via finite state machine. Grounding on high correlation between neighboring blocks, finite state machine is employed both at encoder and decoder to reduce the number of bits required for encoding to enhance coding performance. Two extra intra prediction modes are created in our proposed method. Through these two modes, the number of bits required to denote the current block is greatly reduced and low bit rate can be achieved. Experimental results show that the proposed method can greatly improve coding efficiency of intra macroblock coding in H.264/AVC.