To protect the security of carrier image content and digital watermark copyright, this study proposes a commutative encryption and watermarking algorithm integrating the Arnold permutation and histogram translation-based reversible watermarking algorithm. Taking advantage of the invariance of the image histogram after Arnold permutation, the algorithm maps the operation of watermark embedding in ciphertext to plaintext, which realizes the exchange of encryption and watermark embedding in operation sequence. The watermark can be extracted directly from the watermarked ciphertext, or be extracted after decryption. Experimental results show that the sequence of encryption and watermark embedding of this algorithm does not affect the generation of watermarked ciphertext, and the sequence of decryption and watermark extraction does not influence watermark extraction and image restoration. In addition, the direct decryption yields high-quality watermarked plaintext images, good invisibility of the watermark, and high efficiency of the algorithm.