In this paper, the implementation of a digital signal processor (DSP) based Internet protocol set-top box for home entertainment networks is described. The main functional blocks are the MPEG-2 transport stream demultiplexer, the audio and video decoders and the audio and video display management modules (with on-screen display capabilities). All blocks have been built into a single low-cost DSP to allow multi-format operation in the future. A prototype has been designed and fully tested in a real environment. Currently the set-top box works with a fully optimized MPEG-2 video decoder. A preliminary version of an MPEG-4 video decoder is available now and we are also working in an MPEG-4/AVC (H.264) decoder