A lossless information hiding method based on MPEG-2 color video is proposed in this paper. The method is based on Alattar’s algorithm and it reduced type judgement conditions from Alattar’s 4 inequations to 2 inequations, so it reduced time complexity. Simple data link frame is used during data hiding processing and covert communication experiments are simulated in Local networks by using the algorithm. Host video information can be lossless restored after embedded Chinese characters or fingerprinting images are correctly extracted from video which embedded information. The method can be applied to covert communication or copyright protection of video product.