This paper presents a new algorithm for ultrasonic particle image velocimetry (Echo PIV) for improving the flow velocity measurement accuracy and efficiency in regions with high velocity gradients. The conventional Echo PIV algorithm has been modified by incorporating a multiple iterative algorithm, sub-pixel method, filter and interpolation method, and spurious vector elimination algorithm. The new algorithms' performance is assessed by analyzing simulated images with known displacements, and ultrasonic B-mode images of in vitro laminar pipe flow, rotational flow and in vivo rat carotid arterial flow. Results of the simulated images show that the new algorithm produces much smaller bias from the known displacements. For laminar flow, the new algorithm results in 1.1% deviation from the analytically derived value, and 8.8% for the conventional algorithm. The vector quality evaluation for the rotational flow imaging shows that the new algorithm produces better velocity vectors. For in vivo rat carotid arterial flow imaging, the results from the new algorithm deviate 6.6% from the Doppler-measured peak velocities averagely compared to 15% of that from the conventional algorithm. The new Echo PIV algorithm is able to effectively improve the measurement accuracy in imaging flow fields with high velocity gradients.