In this paper, we propose a watermarking algorithm working directly on JPEG bit-stream. The algorithm embeds watermark bits by modifying de-quantized DC coefficients. By improving an existing embedding method for watermark bit, the quality of the watermarked image can be improved greatly while keeping the same robustness of the original method. Further more, we analyze the performance of the watermarking algorithm against re-quantization and recompression. We give the relationship among the watermarking strength, the quality factor of JPEG compression and the BER (Bit Error Rate) of the watermark. Experiment results support the analysis. Compared with several JPEG-based algorithms in literature, the robustness to JPEG recompression of the proposed algorithm is better than most of them when recompression quality factor is above 30.