Cellular Automata (CA) and Cellular Automata Transfrom (CAT) are introduced, and a novel watermark algorithm joint JPEG image encoding and cellular automata is proposed. An image watermark is scrambled by Moore CA firstly. And then is embedded into the low-frequency subband, which is obtained after the transform of original image with CAT. Then the watermarked image is encoded according the JPEG image compression standard. The watermark is extracted in the decoding process. The experiments show that the proposed algorithm is robust to the common watermark attacks, such as JPEG compression attack, filter attack, rotation attack, and additive noise attack and so on.