In this paper, a novel reference watermarking scheme based on Gyrator transform is presented. The core idea is to segment original image into non-overlapping blocks using zigzag scan followed by the reference image formation considering the spatial frequency of the blocks. Reference image is then transformed in the Gyrator domain. The embedding of the watermark is done by modifying singular values of reference image in Gyrator domain with the singular values of watermark image. The experimental results demonstrates the performance and robustness of the proposed algorithm against a variety of attacks. © 2011 IEEE.