Theories of spread spectrum communications, channel coding, capacity analysis techniques have been widely applied in digital watermarking research. In recent years, communication theory has made an important technological breakthrough. The next generation mobile communication systems (4G) is far exceeding the capacity needs of the traditional Shannon channel capacity limit, and this need promotes the rapid development of multiple-input multiple-output (MIMO) technology. The combination of space-time coding and MIMO technology will breakthrough the capacity limit of single-input single-output (SISO) channel. In this paper, the digital image watermarking system is extended from SISO to MIMO systems based on space-time coding and MIMO communication theory. The new watermarking algorithm is designed in the new framework of space-time coding and MIMO-based communication theory. The watermark capacity and the detection error rate also are further studied under the conditions of different space-time coding. These studies will provide a new idea for the design of new digital watermarking algorithm.