The invention discloses an encrypted domain image reversible data hiding method based on neighborhood prediction. The method comprises three steps including Image Encryption reversible data hiding and; secret information extraction; In the image encryption part, an image is segmented into image blocks; the pixel value of each pixel point in each image block and the value of one element in the random sequence are added for encryption, and modulo operation is performed on 256 to realize encryption ; the linear prediction difference values meeting the specific conditions in the image blocks arekept consistent before and after encryption; data hiding in the encrypted image can be ensured; The method has the advantages that hidden information extraction and image decryption are achieved, complete separation of hidden information extraction and image decryption is guaranteed, hidden information can be effectively extracted in an encryption domain, hidden information can also be effectivelyextracted in a decryption domain, the practicability is higher, and meanwhile it can be guaranteed that an original image can be restored without distortion after the hidden information is extracted.