This paper investigates video coding with wavelet transforms applied in the temporal direction of a video sequence. The wavelets are implemented with the lifting scheme in order to permit motion compensation between successive pictures. We improve motion compensation in the lifting steps and utilize complementary motion-compensated signals. Similar to superimposed predictive coding with complementary signals, this approach improves compression efficiency. We investigate experimentally and theoretically complementary motion-compensated signals for lifted wavelet transforms. Experimental results with the complementary motion-compensated Haar wavelet and frame-adaptive motion compensation show improvements in coding efficiency of up to 3 dB. The theoretical results demonstrate that the lifted Haar wavelet scheme with complementary motion-compensated signals is able to approach the bound for bit-rate savings of 2 bits per sample and motion-accuracy step when compared to optimum intra-frame coding of the input pictures.