System and method for optimizing a transcoding session between multiple terminals are disclosed. The method determines properties of the transcoding session, including a number of terminals participating in the transcoding session, media characteristics supported by each terminal, a measure of performance of the transcoding session to be optimized, and optionally a proportion of time involved in the transcoding session for each terminal. Then a cost function characterizing the measure of performance of the transcoding session and depending on the above properties of the transcoding session is built, followed by optimizing the cost function with respect to said measure of performance to determine an optimal measure of performance for the transcoding session and optimal values for the media characteristics for each terminal. In one embodiment, codecs used by multiple terminals and computational complexity of the transcoding session are optimized. A corresponding system for optimizing the transcoding session is also provided.