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Abstract--Watermarking algorithms have a basic requirement that the watermark amplitude should be as high as possible for robustness and at the same time the watermark should not introduce any perceptible artifacts. This paper proposes an adaptive watermarking method based on the human visual system model and the fuzzy inference system in wavelet domain. Fuzzy logic is used for data fusion and builds a human visual system (HVS) model in wavelet domain. The fuzzy input variables (like curvature, area, bumpiness, brightness, luminosity, texture, edge etc.) are computed for each wavelet coefficient in the 3D model. The output of the fuzzy system is a single value which gives a perceptual value for each corresponding wavelet coefficient. Thus, the fuzzy perceptual mask combines all these non-linear variables to build a simple, easy to use HVS model. Simulation results prove it to be robust against smoothing, cropping, affine operations and noise attacks, and at the same time achieve a high level of imperceptibility.