Abstract: In the research of digital watermark, blocking-artifact problem is a very big difficulty of copyright protection.An improved layer DCT algorithm is proposed based on wavelet features, and it is applied to the digital watermark.The low-frequency and middle-frequency coefficients were extracted after DCT transform and reconstructed by the spatial position.The digital watermark was embedded in low-frequency and middle-frequency domain, and the number of layers which should be chosen was researched.The result shows that the improved layer DCT algorithm does well in removing the blocking artifact, and satisfies the request of invisibility.The improved layer DCT algorithm has better robustness with the attacking experiments, and the practical application of layer DCT is enlarged.