Abstract: Though the DCT based steganography of JPEG carrier image may achieve higher anonymity and robustness, its hiding capacity is much less than that in spatial domain. Aiming at this shortcoming, this paper proposes an algorithm based on extended DCT block transformation such that the hiding capacity may be raised, and both anonymity and image adaptability may be improved. Instead of hiding secret message directly into DCT coefficients of quantized JPEG, this algorithm inserts a hiding section of extended block transformation before the final quantization. This not only increases the invisibility and complexity of the whole steganography process, but also achieves the improvement and joint utilization of former algorithms. It is shown from simulation experiments that both the capacity and anonymity are effectively improved.