Abstract-In view of dual watermarking algorithm for dual two value image watermarking, the watermark information there is a gray image watermarking in the expression is obviously insufficient. The proposed embedded in the carrier image on the dual watermark includes a two watermark image and a gray image watermarking algorithm, the persuasive power while maintaining the original two values of the watermark robustness at the same time, improve the watermark information. In order to balance the robustness and invisibility of watermarking algorithm, this paper analyzes the embedding position and strategy of transform domain algorithms, the DC coefficient in the carrier image is divided into blocks of DCT spectrum and spectrum on the combination of DWT coefficient method and the advantage of embedded dual watermarking, and use the NEC characteristic of the algorithm is improved adaptive based on the embedded mode. The gray image watermark bit plane decomposition compression high four bit plane information as watermarking, in reducing the original watermark loading and enhance the overall strength of self recovery system. This paper from the working principle, classification of digital watermarking, attack types, performance index, evaluation method and uses six aspects were introduced to the digital watermarking technology. Simulation study of a digital image watermarking algorithm based on DCT transform and Arnold transform, the algorithm's imperceptibility, robustness and security are analyzed, the algorithm for embedding process.