We present a robust stereo-image coding algorithm using digital watermarking in fractional Fourier transform (FrFT) and singular value decomposition (SVD). For the purpose of the security, the original (left stereo) image has been degraded and watermark (right disparity map) is embedded in the degraded image. This watermarked degraded stereo image is processed in an insecure channel. At the receiver's end, both the watermarked image (left stereo image) and watermark images are found by the decoding process. The use of the FrFT, SVD, and degradation process of the stereo image add much more complexity to decode the information about the stereo images and disparity map extraction. Moreover, processing of the watermarked image only provides the stereo as well as 3-D information of the scene/object. Experimental results show that the proposed algorithm is efficient to achieve stereo image security. © 2009 SPIE and IS & T.