This paper presents a chaotic encryption based blind digital image watermarking technique applicable to both grayscale and color images. Discrete Cosine Transform (DCT) is used before embedding the watermark in the host image. The host image is divided into 8×8 non-overlapping blocks prior to DCT application, and the watermark bit is embedded by modifying difference between DCT coefficients of adjacent blocks. Arnold Transform is used in addition to chaotic encryption to add double layer security to the watermark. Three different variants of the proposed algorithm have been tested and analyzed. The simulation results show that the proposed scheme is robust to most of the image processing operations like JPEG compression, sharpening, cropping, median filtering, etc. To validate the efficiency of the proposed technique, the simulation results are compared with certain state-of-art techniques. The comparison results illustrate that the proposed scheme performs better in terms of robustness, security and imperceptivity. Given the merits of the proposed scheme, it can be used in applications like e-healthcare and telemedicine to robustly hide electronic health records in medical images.