Abstract: An improved algorithm is proposed based on two key factors based on image quality of Ni's algorithm. At first, the type of image block is predicted. Histogram is only allowed to shift in particular image blocks, so the number of shifted pixels can be decreased. Secondly, the secret data will be pre-processed to get the less number of bit‘1’, which can improve image quality. At the same time, the capacity of the hidden data is increased based on the two-direction shifting. The test results show that the algorithm can accomplish the reversible data hiding, furthermore, compared with Ni algorithm, it has lower distortion after information hiding.