Reversible data hiding in the encrypted domain (RDH-ED) is a technique that protects the privacy of multimedia in the cloud service. In order to manage three-dimensional (3D) models, a novel RDH-ED based on prediction error expansion (PEE) is proposed. First, the homomorphic Paillier cryptosystem is utilized to encrypt the 3D model for transmission to the cloud. In the data hiding, a greedy algorithm is employed to classify vertices of 3D models into reference and embedded sets in order to increase the embedding capacity. The prediction value of the embedded vertex is computed by using the reference vertex, and then the module length of the prediction error is expanded to embed data. In the receiving side, the data extraction is symmetric to the data embedding, and the range of the module length is compared to extract the secret data. Meanwhile, the original 3D model can be recovered with the help of the reference vertex. The experimental results show that the proposed method can achieve greater embedding capacity compared with the existing RDH-ED methods.