A novel technique is proposed for watermarking of MPEG-1 and MPEG-2 compressed video streams. The proposed scheme is applied directly in the domain of MPEG-1 system streams and MPEG-2 program streams (multiplexed streams). Perceptual models are used during the embedding process in order to avoid degradation of the video quality. The watermark is detected without the use of the original video sequence. A modified correlation-based detector is introduced that applies nonlinear preprocessing before correlation. Experimental evaluation demonstrates that the proposed scheme is able to withstand several common attacks. The resulting watermarking system is very fast and therefore suitable for copyright protection of compressed video.