This paper designs a JPEG compressed domain digital watermarking system based on FPGA， realizing the real-time embedding of watermark information in JPEG image. After watermarking information is preprocessed by binary and Arnold transform， watermark is embedded into the quantized DCT coefficients with improved LSB embedding algorithm. Then， to complete the JPEG compressed domain digital watermark embedding， the modified DCT coefficients are processed by entropy coding process， and JPEG encoding file is generated. Finally， the design is implemented and tested by the joint system of FPGA develop board and host computer. The results show that the proposed algorithm has a good performance of invisible effect and robustness， and a high throughput.