With the development of digital design and processing and the explosive growth of the demand for two-dimensional CAD engineering graphics, more attention has been paid on the security and the copyright issues of engineering graphics. In this paper, an improved reversible watermarking algorithm in wavelet domain for two-dimensional CAD engineering graphics is proposed. Firstly, the watermark information is preprocessed by compound chaos sequence. And then, block the graphic and extract all vertexes in each blocks of the 2D CAD engineering graphics, Log-polar Mapping (LPM) and wavelet transform are done to them respectively to achieve the invariance of affine transform. Finally, the encrypted watermark is embedded into detailed coefficients by using improved quantization index modulation (IQIM) scheme. Compared with the original previous algorithm, theoretical analysis and experimental results show that the proposed algorithm has not only good visibility and good reversibility, but also stronger robust against the attacks such as transformation, rotation, equal scaling and entity deleting, tampering or adding etc.