In this paper, we propose an early merge mode decision algorithm for HEVC inter prediction to reduce the computational complexity using early zero-block (ZB) detection. To improve the coding performance degradation introduced in the proposed algorithm, we also propose a new merge candidate decision scheme which suggests using decoder-derived merge candidates for merge mode decision, based upon both sum of absolute bidirectional prediction differences (SABPD) and template matching (TM) criteria. In the proposed scheme, only a 1-bit flag for merge index is required for transmission instead of prefix coded merge index. The experimental results reveal that the proposed algorithm outperforms the inter prediction proposed in HEVC in both coding performance and computational complexity. The results demonstrate that at low bit rates the proposed algorithm achieves average 1.6% BDBR reduction with 38% reduction of total encoding time, compared to the original HEVC inter prediction.