Fractional Motion Estimation (FME) is an advanced feature adopted in H.264/AVC video compression standard with quarter-pixel accuracy. Although FME could gain considerably higher encoding efficiency, sub-pixel interpolation and sum of absolute transformed difference (SATD) computation, as main parts of FME, increase the computation complexity a lot. To reduce the complexity of FME, this paper proposes a full computation reusable VLSI oriented algorithm. Through exploiting the similarity among motion vectors (MVs) of partitions in the same macroblock (MB), temporary computation results can be fully reused. Furthermore, a simple and effective searching method is adopted to make the proposed method more suitable for VLSI implementation. Experiment results show that up to 80% add operations and 85% internal reference frame memory access operations are saved without any degradation in the coding quality.