In this paper, a novel robust grayscale watermarking algorithm based on Two-Levels DCT and SVD is proposed. The watermark signal is (32× 32 × 8) bit gray image. First, the original image is divided into blocks according to the size of the watermark; each block corresponds to each pixel value of watermark. Second, the DCT is applied in each block twice and form new blocks. Then, Get the largest value of each new block to form a new matrix .Apply SVD on the new matrix to get matrices U, S and V for each block. The pixel value of watermark is embedded into the S matrix of the new matrix. And the watermark can be detected with the original image. The experimental results show that the algorithm can satisfy the transparence and robustness of the watermarking system very well. Experimental evaluation demonstrates that the proposed scheme is able to withstand a variety of attacks very well.