Abstract: A combination of Discrete Cosine Transform (DCT) and Discrete Wavelet Transform(DWT) domain is introduced and a quantization function is defined to quantify wavelet coefficients according to the watermarks to be embedded. The quantization function can be dynamically adjusted according to the local image characteristics. Three private chaos keys are designed to define the watermarks to be embedded and determine the position for watermarking. Experimental results show that the proposed algorithm is robust against JPEG lossy compression, and provides very good classification of intentional and incidental tampering.