In the world of IP surveillance, each IP camera initially captures analog image signals but immediately converts them into digital signals within the camera itself. Some digital processing, such as compression and motion detection, can occur directly within the camera. The digital video image is then transmitted over the IP network using Ethernet communication (CAT5). Power for the camera can be supplied directly from a DC source or through the Ethernet cable using Power-over-Ethernet (PoE) technology. Like all network devices, each IP camera requires a unique IP address and related identification properties.

Management software needs to be installed on the computer that will monitor the IP camera images. A high-performance computer with the appropriate management software is set up to record all the images from the IP camera system. Alternatively, a network video recorder (NVR) can perform the storage and overall monitoring functions for the IP camera system. Typically, the monitoring software installed on a PC or NVR should be from the same manufacturer as the IP camera due to the lack of standardization among different vendors.

The IP camera signals transmitted over the Internet function similarly to how DVR signals are transmitted. However, each IP camera is a separate signal stream with its own IP address or port. This can significantly impact bandwidth usage when viewing remotely.