In Complementary Metal Oxide Semiconductor (CMOS) camera-based visible light communication system using the rolling shutter effect, the number of pixel columns representing one bit will decrease and the fluctuation of grayscale values became serious with the increasing of system bit rate, which leads to the degradation of demodulation performance. A novel demodulation algorithm based on global and local dynamic thresholds and segmented downsampling is proposed. The global dynamic threshold is fitted by grayscale values of all columns in an image, and frame headers contained in the image are located. Then the local dynamic thresholds are fitted respectively by the grayscale values in each data frame. Finally, the result of grayscale decision is segmented downsampling to recover the transmitted bit sequence. The experimental results show that when the column scanning frequency of the rolling shutter is 103.68 kHz, the algorithm is feasible with 2.962 pixels/bit, where the maximum bit rate and net data rate can reach 35 and 10.8 kbit/s, respectively.