Methods and apparatus are provided for adaptive residual updating of template matching prediction for video encoding and decoding. In one embodiment, an apparatus and method encodes picture data for at least a block in a picture using template matching prediction, wherein the template matching prediction involves selecting from among a plurality of residual updating schemes for use in encoding the block. In another embodiment, an apparatus and method encodes a block in a picture using template matching prediction, wherein the template matching prediction involves partitioning the block into a plurality of sub-blocks, and applying a transform to a residual of a particular sub-block from among the plurality of sub-blocks subsequent to searching for a prediction for the particular sub-block block and prior to completion of processing of the block with respect to the template matching prediction.