We propose an image watermarking scheme based on the phase retrieval algorithm in gyrator domain. The watermark is converted into a noise-like image by Arnold transform. The scrambled image is regarded as the amplitude of gyrator spectrum. The Gerchberg–Saxton algorithm is employed to obtain the unknown phase function in gyrator pair, in which the host image is the amplitude of input function. The phase information and the parameters of the two transforms serve as the key of watermarking algorithm. The numerical simulation has demonstrated the performance of the proposed algorithm.