A method and a computer-readable medium containing computer program for simultaneously performing rate control and video denoising for video corrupted by noise are presented. Video data includes original video data and noise data. A variance of the noise data for each macroblock within a frame is estimated. Based on the estimated noise variance, a low bound quantization parameter is generated. The video data are reconstructed such that the distortion between the original video data and reconstructed video data is minimized over each macroblock within a frame. The minimization of the distortion between the original video and reconstructed video data is implemented using a quantization parameter that is equal to or larger than the low bound quantization parameter.