With the exponential growth of wireless voice markets, demand for wireless video services is soon to follow. However, bandwidth limited wireless channels coupled with mobility issues pose a great challenge in the hardware, software and algorithm design of communication systems. Raw video transmission is a high bandwidth application due to its spatial and temporal redundancies. Hence effective video communication over wireless channels calls for intelligent video coding and protection schemes. Also, the real-time nature of video necessitates high performance hardware and efficient software. This paper describes a modular and standards-independent DSP-based testbed (Paladin) designed for real-time video communication over low-bandwidth channels. In particular, we demonstrate the real-time transmission of MPEG-4 video and JPEG2000 still images over the Bluetooth wireless standard. Such a demonstration has many potential applications. We have designed the testbed to explore the possibilities, demands, and challenges of real-time wireless video transmission. We have implemented the MPEG-4 and JPEG2000 source coding on two DSP platforms: a Texas Instruments (TI) TMS320C6211, and a TI TMS3206416.