In this paper, we implemented a new algorithm in spatial domain with shell based pixel selection for watermark embedding and extraction. Here, the watermark is first converted into binary image by local thresholding and then converted into a logical matrix. Before embedding, each value of logical matrix is XOR-ed using a random 8-bit key to generate modified logical matrix. Next, the pixel of host image is selected by shell-based technique along row and column alternatively, starting from position (2, 2) and moving diagonally. To prevent duplicate selection of pixel two direct-address tables are maintained. Each pixel is sliced into red, green, blue and alpha components and bits from modified logical matrix are embedded into LSB of each component and finally an extraction key is generated. To detect tampering in an image, watermark is extracted using key and compared with original watermark. The proposed method is evaluated with benchmark dataset and we obtained a favorable result in terms of PSNR and BER. We reported the results of various kinds of image manipulation to assess the performance of the proposed method by drawing a comparative study of the original watermark and the watermark extracted from a manipulated image. Shell based pixel selection gives sensitivity and converting watermark to logical matrix and storing it in each component of pixel gives higher capacity than traditional methods. © 2016 IEEE.