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Aiming at the problem of less watermarking information capacity in existing digital audio watermarking, this paper presented a large capacity digital audio watermarking algorithm using 24 bit true color image as watermarking, compared with algorithms using pseudo random sequence, binary image or gray image as watermarking, the watermarking information capacity was increased significantly. This algorithm used firstly Arnold transform and discrete cosine transform to carry on scrambling encryption and compression for the watermarking image respectively, then the original audio signal was segmented, and was carried on three level discrete wavelet transform. The watermarking information was embedded into the wavelet low frequency components, the embedding strength was dynamically determined by the values of low frequency coefficients. Experiments show that the security and the imperceptibility of the watermarking are very good, it has good robustness against many kinds of attacks such as resampling, filtering, noise addition,-lossy compression, and so on.