This paper proposes a rate-based active queue management algorithm or RAQM. It uses the aggregated traffic input rate to calculate packet drop probability according to an exponential rule. We analyze the stability and investigate practical implementation issues of the RAQM. Simulations are carried out to study RAQM performance and to compare with other AQM algorithms, in particular PI and REM schemes. The results demonstrate that RAQM achieves better stability and faster response as it can quickly regulate the queue length to the expected value with small overshoot. RAQM also obtains better tradeoff between link utilization and queuing delay, and obtains higher goodput with the same buffer size as in PI and REM schemes. Finally RAQM has O(1) complexity, thus is independent of the number of flows.