Embedded signature-based authentication is a highly promising watermarking method for solving high-level authentication problems. This work proposes such a watermarking approach using channel statistics evaluated from a reference watermark. The basic concept is to consider the problem to be an example of communications with side information, which is the reference watermark embedded in the host with the signature at the sender site. At the receiver site, the reference watermark is first extracted to determine channel statistics, which are used to generate information about signature reliability. Three kinds of information are derived, including a reliability measure, an entropy measure, and an authenticated signature. Experimental results establish that the measures of reliability and uncertainty are meaningful, and that the embedded signature can survive high-quality JPEG compression and manipulations such as negation, cropping, replacement, and modification.