A new rate control algorithm for the H.264 encoder is developed in this work. There are several unique features in the proposed rate control scheme. First, a two-stage encoding mechansim is used to resolve the problem of inter-dependency between R-D optimization (RDO) and rate control (RC) in H.264. Second, it is emphasized that the bits of the header information may occupy a larger portion of the total bit budget especially when encoding at low bit rates in H.264. To address this issue, a rate model for the header information is established so as to estimate header bits more accurately. Third, a new source rate model is proposed to estimate the quantization parameter (QP) from the residual signal. Built upon the above ideas, a rate control algorithm is developed for the H.264 baseline-profile encoder under the constant-bit-rate (CBR) constraint. It is shown by experimental results that the proposed scheme can control bit rates accurately with the R-D performance better than that of the rate control algorithm implemented in H.264 JM8.1a.