A real-time digital image stabilization system was presented，which was based on the gray projection algorithm. It demonstrates the application of gray projection algorithm in the field of digital image stabilization,as well as the algorithm optimizations of median filter,region selection and referenced frame selection in image stabilization system. The hardware of this system consists of vibration platform,optical lens,CCD,A/D card and computer. The software programming is implemented in Visual C++ programming environment on the DirectShow platform. Through quantitative analysis and evaluation,the result of image stabilization test shows the convenient,quick and accurate characteristics of gray projection algorithm. Also,it demonstrates itself as a feasible approach for real-time digital stabilization of cameras.