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This paper proposes a novel method of embedding a watermark in H.264 AVC video coding standard. The proposed method works in the transform domain by embedding the watermark in the residual DC values of the 4 times 4 intra-prediction blocks. The DC values that are to contain a watermark bit are chosen randomly. The set of random values that are used to select the DC values are considered to be a ldquokeyrdquo. This key is made available at the receiver side in order to extract the watermark. Experimental results show that the technique is transparent with minimal effect on the host video sequence. Further, since only the DC coefficients are utilized to contain the watermark, the embedded watermark is resistant to compression.