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Recent investigations have shown that the support of extended block sizes for motion-compensated prediction and transform coding can significantly increase the coding efficiency for high-resolution video relative to H.264/AVC. In this paper, we present a new context-modeling scheme for the coding of transform coefficient levels that is particularly suitable for transform blocks greater than 8 × 8. While the basic concept for transform coefficient coding is similar to CABAC, the probability model selection has been optimized for larger block transforms. The proposed context modeling is compared to a straightforward extension of the CABAC context modeling; both schemes have been implemented in a hybrid video codec design that supports block sizes of up to 128 × 128 samples. In our simulations, we obtained overall bit rate reductions of up to 4%, with an average of 1.7% with the proposed context modeling scheme.