A hyperchaos-based watermarking algorithm is developed in the wavelet domain for images.The algorithm is based on discrete wavelet transform and combines the communication model with side information.We utilize a suitable scale factor to scale host image,then construct cosets for embedding digital watermarking according to scale version of the host image.Our scheme makes a tradeoff between imperceptibility and robustness,and achieves security.The extraction algorithm is a blind detection algorithm which retrieves the watermark without the original host image.In addition,we propose a new method for watermark encryption with hyperchaotic sequence.This method overcomes the drawback of small key space of chaotic sequence and improves the watermark security.Simulation results indicate that the algorithm is a well-balanced watermarking method that offers good robustness and imperceptibility. A hyperchaos-based watermarking algorithm is developed in the wavelet domain for images. The algorithm is based on discrete wavelet transform and combines the communication model with side information. We utilize a suitable scale factor to scale host image, then construct cosets for embedding digital watermarking according to scale version of the host image. Our scheme makes a tradeoff between imperceptibility and robustness, and achieves security. The extraction algorithm is a blind detection algorithm which retrieves the watermark without the original host image. addition, we propose a new method for watermark encryption with hyperchaotic sequence. This method overcomes the drawback of small key space of chaotic sequence and improves the watermark security. Simulation results indicate that the algorithm is a well-balanced watermarking method that offers good robustness and imperceptibility.