Abstract. We present an algorithm for fragile watermarking of color, or multi-channel, images either in uncompressed format, in lossless compressed format, or in compressed format with locally compressed units (like JPEG). The watermark is embedded into the Karhunen-Loève transform (KLT) coefficients of the host image, and the security of the method is based on the secrecy of the KLT basis computed from a corresponding secret key image. The watermark bits may be embedded with various methods, in particular the use of syndrome coding has proven flexible and effective.Genetic Algorithms (GAs) are used to find the optimum pixel modification leading to the watermark embedding. The resulting watermarked images have shown to have both a high objective quality (in terms of PSNR and SSIM) and a high subjective quality (tested by a group of observers). At the same time, the watermark extraction is very sensitive to small (±1 intensity level for single pixel) modifications, ensuring image authentication with very high probability.