This paper presents an efficient method for calculating the similarity between 2D closed shape contours. The proposed algorithm is invariant to translation, scale change and rotation. It can be used for database retrieval or for detecting regions with a particular shape in video sequences. The proposed algorithm is suitable for real-time applications. In the first stage of the algorithm, an ordered sequence of contour points approximating the shapes is extracted from the input binary images. The contours are translation and scale-size normalized, and small sets of the most likely starting points for both shapes are extracted. In the second stage, the starting points from both shapes are assigned into pairs and rotation alignment is performed. The dissimilarity measure is based on the geometrical distances between corresponding contour points. A fast sub-optimal method for solving the correspondence problem between contour points from two shapes is proposed. The dissimilarity measure is calculated for each pair of starting points. The lowest dissimilarity is taken as the final dissimilarity measure between two shapes. Three different experiments are carried out using the proposed approach: letter recognition using a web camera, our own simulation of Part B of the MPEG-7 core experiment “CE-Shape1” and detection of characters in cartoon video sequences. Results indicate that the proposed dissimilarity measure is aligned with human intuition.