With the intrusion of internet into the lives of every household and terabytes of data being transmitted over the internet on daily basis, the protection of content being transmitted over the internet has become an extremely serious concern. Various measures and methods are being researched and devised everyday to ensure content protection of digital media. To address this issue of content protection, this paper proposes an RGB image steganography based on sixteen-pixel differencing with n-bit Least Significant Bit (LSB) substitution. The proposed technique provides higher embedding capacity without sacrificing the imperceptibility of the host data. The image is divided into 4× 4 non overlapping blocks and in each block the average difference value is calculated. Based on this value the block is classified to fall into one of four levels such as, lower, lower-middle, higher-middle and higher. If block belongs to lower level then 2-bit LSB substitution is used in it. Similarly, for lower-middle, higher-middle and higher level blocks 3, 4, and 5 bit LSB substitution is used. In our proposed method there is no need of pixel value readjustment for minimizing distortion. The experimental results show that stego-images are imperceptible and have huge hiding capacity.