This paper presents an optimal watermark embedding method combining spread spectrum and quantization. In the method, the host signal vector is quantized to embed a multiple-bit watermark, and meanwhile, the quantized signal is made to locate in the detectable region defined in the context of spread spectrum watermarking. Under the two constraints, the optimal watermarked signal is derived in the sense of minimizing the embedding distortion. The proposed method is further implemented in wavelet transform domain, where the insensitive wavelet coefficients are selected according to the modified human visual model for watermark embedding. Simulations on real images by using the wavelet-based implementations demonstrate the proposed method performs very well in both watermark imperceptibility and robustness and is more robust to typical signal processes, e.g., additive noise, JPEG compression, etc., as compared with the state-of-the-art watermarking methods.