A new systolic algorithm which computes image differences in run-length encoded (RLE) format is described. The binary image difference operation is commonly used in many image processing applications including automated inspection systems, character recognition, fingerprint analysis, and motion detection. The efficiency of these operations can be improved significantly with the availability of a fast systolic system that computes the image difference as described in this paper. It is shown that for images with a high similarity measure, the time complexity of the systolic algorithm is small and, in some cases, constant with respect to the image size. A formal proof of correctness for the algorithm is also given.