In this paper a novel technique, Discrete Fourier Transformation based Image Authentication (DFTIAT) has been proposed to authenticate an image and with its own application one can also transmit secret message or image over the network. Instead of direct embedding a message or image within the source image, choosing a window of size 2 x 2 of the source image in sliding window manner then convert it from spatial domain to frequency domain using Discrete Fourier Transform (DFT). The bits of the authenticating message or image are then embedded at LSB within the real part of the transformed image. Inverse DFT is performed for the transformation from frequency domain to spatial domain as final step of encoding. Decoding is done through the reverse procedure. The experimental results have been discussed and compared with the existing steganography algorithm S-Tools. Histogram analysis and Chi-Square test of source image with embedded image shows the better results in comparison with the S-Tools. © 2009 IEEE.