In digital watermarking, a watermark is embedded into a covertext in such a way that the resulting watermarked signal is robust to certain distortion caused by either standard data processing in a friendly environment or malicious attacks in an unfriendly environment. The watermarked signal can then be used for different purposes ranging from copyright protection, data authentication,fingerprinting, to information hiding. In this thesis, digital watermarking will be investigated from both an information theoretic viewpoint and a numerical computation viewpoint. From the information theoretic viewpoint, we first study a new digital watermarking scenario, in which watermarks and covertexts are generated from a joint memoryless watermark and covertext source. The configuration of this scenario is different from that treated in existing digital watermarking works, where watermarks are assumed independent of covertexts. In the case of public watermarking where the covertext is not accessible to the watermark decoder, a necessary and sufficient condition is determined under which the watermark can be fully recovered with high probability at the end of watermark decoding after the watermarked signal is disturbed by a fixed memoryless attack channel. Moreover, by using similar techniques, a combined source coding and Gel'fand-Pinsker channel coding theorem is established, and an open problem proposed recently by Cox et al is solved. Interestingly, from the sufficient and necessary condition we can show that, in light of the correlation between the watermark and covertext, watermarks still can be fully recovered with high probability even if the entropy of the watermark source is strictly above the standard public watermarking capacity. We then extend the above watermarking scenario to a case of joint compression and watermarking, where the watermark and covertext are correlated, and the watermarked signal has to be further compressed. Given an additional constraint of the compression rate of the watermarked signals, a ...