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In this paper, we propose a new interpolation technique which considers all the neighboring pixels as well as their impact on the reference pixels to provide better quality interpolated image and a new data hiding scheme which embeds the secret data in the interpolated pixels by taking into account the human visual system so that quality of the resultant image is maintained. The proposed interpolation technique is an improvement of the existing neighbor mean interpolation (NMI) technique in such a way that the interpolated image would have more resemblance to the input image. The proposed interpolation technique has less computational cost like NMI as it does not perform much computation during estimation unlike B-Spline, Bilinear Interpolation etc. The proposed data hiding scheme comes into the category of reversible data hiding scheme as the input image can be reconstructed after extraction of …