Abstract. We propose a high-capacity data hiding scheme for palettebased images that does not seriously degrade the image quality in this paper. The proposed scheme can embed a multiple-bit message within the unit of a pixel matrix by using Euclidean distance, while some conventional schemes can embed only a one-bit message per pixel. The stegoimages created by using our scheme offer a better quality compared to those by the conventional scheme. Moreover, we have obtained these results with low implementation cost. The experimental results show that the proposed scheme is efficient.