This paper presents a novel occlusion handling frame rate up-conversion method. The proposed method consists of two main steps; true motion estimation and directionally adaptive motion compensated interpolation. In the true motion estimation step, forward and backward directed motion vectors are estimated and merged recursively in order to reliably estimate the occlusion regions without increasing the number of frame buffers. After acquiring a reliable motion vector field, motion compensated interpolation is done in the second step by determining the source directions under an OBMC framework. The experimental results show that the proposed approach improves the motion estimation / compensation performances and reduce the occlusion based halo artifacts compared to the conventional approaches.