A method of effective image authentication and image restoration by hiding watermarks in DCT (Discrete Cosine Transform) coefficients is presented. The basic concept is to embed the selected significant watermarking bits for authentication and restoration into the selected medium- and low-frequency DCT coefficients. Thus, the illegally tampered regions can be detected, and then the original information in that region can be extracted for restoration. Experimental results show that the proposed authentication and restoration techniques can be applied to a DVR (Digital Video Recorder) system, in which no original image information is involved, and it can effectively detect the illegally tampered region and restore the tampered region in the human visual perceptual quality by only using a little embedded original information.