To reduce the distortion of stego-image,a reversible data hiding sch eme is proposed based on interpolation prediction and dividing blocks model.At first,the original image is processed to get the interpolation-error image using the interpolation technique which is the process of producing a high -resolution image from its lower-resolution counterpart.The interpolation-error equals the difference between pixel value and its interpolation value.Then the interpolation-error histogram can be built.Compa red with other histograms,this interpolation-error histogram will be more steak and the chance to obtain peak points will be higher.Next,the interpolation-error image will be divided into blocks,and by using the model,th e blocks with peak points will be identified, which are the only candidates to hide secret data based on the prediction-error histogram shifting.So the number of shifted points will be decreased during the hiding.Finally,the stego-image is obtained by changing pixel values in the original image.The experiments show that this algorithm can restore the original image without any distortion after the hidden data has been extracted.Furthermore,t he quality of stego-image is better and the embedding capacity is higher.The algorithm can be deployed for informat ion hiding and image authentication.