Digital holography techniques can be utilized to implement image watermarking schemes. In a previous method proposed by Takai and Mifune [Appl. Opt. 41,865 (2002)], a watermark image is transformed into a digital Fourier hologram, which then is directly superposed onto a content image to perform the embedding process. In the detection stage, the watermark is extracted based on the inverse Fourier transform and optical holography techniques. A method in which the hologram is superposed on the discrete-cosine-transform domain of the content image is proposed to significantly improve Takai and Mifune's method. The proposed method can greatly reduce the degradation on the superposed image, which is the major drawback in Takai and Mifune's method. Simulation results also demonstrate that the watermark can be successfully extracted under different kinds of attack.