Interpolation based reversible data hiding (IRDH) schemes have recently been studied for better rate-distortion performance. However, most of them do not have any consideration of an ‘effective’ capacity management for increasing size of payload. In this paper, we develop and present an IRDH scheme with adaptive embedding, which determines how many bits of an interpolated pixel can be used for the best possible embedded image quality by using a parameter to control the embedding rate. While compared with the prominent IRDH schemes, our scheme demonstrated its efficiency for better embedding rate distortion performance. Being up-sampled, the embedded image would have higher spatial resolution. It also does not require any location map, and thus the total capacity can be effectively used for data embedding. Moreover, it keeps the original pixels untouched and thus, would be useful in military and medical image applications that restrict minimum possible changes in the cover images.