A nonuniform quantization index modulation watermarking algorithm based on image wavelet transform was presented to improve the robustness and invisibility of digital watermark. By taking discrete wavelet transform of original image, the middle-frequency wavelet coefficients, which were divided into small blocks, were selected as carrier of watermark information. A two-value watermark sequence was embedded into the mean values of block coefficients by applying non-uniform quantization index modulation. According to human vision system, different blocks used different quantization steps and were adaptive to the difference of adjacent coefficients. Experimental results showed that this algorithm can get a watermarked image with perceptual invisibility, high security and strong robustness against common image attacks.