Finite state vector quantization (FSVQ) has been proven to be a high-quality and low-bit rate coding scheme. An FSVQ has achieved the efficiency of a small codebook (the state codebook) VQ while maintaining the quality of a large codebook (the master codebook) VQ. However, the large master codebook becomes a primary limitation of FSVQ when the implementation is carefully taken into account. A large amount of memory would be required in storing the master codebook, and much effort would be spent in maintaining the state codebook if the master codebook became too large. This problem could be partially solved by the mean/residual technique (MRVQ)-that is, the block means and the residual vectors would be separately coded. However, MRVQ has its own drawbacks. Additional bits would be required in coding those means. Moreover, electing the state codebooks in the residual domain would be difficult. A new hybrid coding scheme called the finite state residual vector quantization (FSRVQ) is proposed in this article for the sake of using both advantage in FSVQ and MRVQ. The codewords in FSRVQ were designed by removing the block means to reduce the codebook size. The block means were predicted by the neighboring blocks to reduce the bit rate. In addition, the predicted means were added to the residual vectors so that the state codebooks could be generated entirely. The performance of FSRVQ was indicated from the experimental results to be better than that of both ordinary FSVQ and MRVQ uniformly.