A novel grayscale watermark pre-processing and a robust video watermarking algorithm for the emerging video coding standard H.264/AVC are proposed in this paper for the copyright protection application. This algorithm can insert grayscale watermark patterns such as detailed trademarks or logos into the low bit-rate H.264/AVC videos in the compressed domain with good robustness and high capacity. The marked video sequences maintain good visual quality and the same overall consuming bit-rate. The proposed algorithm can robustly survive transcoding process and common signal processing, such as bit-rate reduction, Gaussian filtering and contrast enhancement.