With the increasing popularity of JPEG images, a need arises to devise effective watermarking techniques which consider JPEG compression as an acceptable manipulation. In this paper, we present a semi-fragile watermarking scheme which embeds a watermark in the quantized DCT domain. It is tolerant to JPEG compression to a pre-determined lowest quality factor, but is sensitive to all other malicious attacks, either in spatial or transform domains. Feature codes are extracted based on the relative sign and magnitudes of coefficients, and these are invariant due to an important property of JPEG compression. The employment of a nine-neighborhood mechanism ensures that non-deterministic block-wise dependence is achieved. Analysis and experimental results are provided to support the effectiveness of the scheme.