Considering most of the present color image watermarking techniques still use binary images or gray images as the watermarks, and these techniques only extract the watermarks while ignoring the original host image restoration. A blind digital watermarking algorithm is proposed to embed a color watermark image into a color host image. The algorithm allows extracting watermark without the original watermark and host image. The original watermark image and host image can be restored simultaneously by using the image embedded with watermark. Firstly, Arnold transform was respectively used on R, G, B component of the watermark image with different times to scramble the watermark image. Then decomposed separately the R, G, B component of the color host image by 2D DWT(Discrete Wavelet Transform), and got the respective horizontal detail coefficients. Finally embedded the disorderly R, G, B component of the watermark image into the horizontal detail coefficient of R, G, B component of the host image. IDWT(Inverter Discrete Wavelet Transform) is masterly used as the embed way. Due to using HVS(Human Visual System) and adopting multiple key mechanisms, the digital watermarking algorithm has very good transparency and security. In addition, the algorithm is robust against various signals processing such as scrawling, adding noise, cutting, and JPEG compression etc.