This study presents a novel technique for image steganography based on Fractional Random Wavelet Transform. This transform has all the features of wavelet transform with randomness and fractional order built into it. The randomness and fractional order in the algorithm brings in robustness and additional layers of security to steganography. The stegano image generated by this algorithm contains both cover image and hidden image and image degradation is not observed in it. The steganography strives for security and pay load capacity. The performance measures like PeakSignal to Noise Ratio (PSNR), Mean Square Error (MSE), Structural Similarity Index Measure (SSIM) and Universal Image Quality Index (UIQI) are computed. In this proposed algorithm, imperceptibility and robustness are verified and it can sustain geometric transformations like rotation, scaling and translation and is compared with some of the existing algorithms. The numerical results show the effectiveness of the proposed algorithm. © Maxwell Scientific Organization, 2015.