Steganography aims to hide secret data into an innocuous cover-medium for transmission and to make the attacker cannot recognize the presence of secret data easily. Even the stego-medium is captured by the eavesdropper, the slight distortion is hard to be detected. The LSB-based data hiding is one of the steganographic methods, used to embed the secret data into the least significant bits of the pixel values in a cover image. In this paper, we propose an LSB-based scheme using reflected-Gray code, which can be applied to determine the embedded bit from secret information. Following the transforming rule, the LSBs of stego-image are not always equal to the secret bits and the experiment shows that the differences are up to almost 50 %. According to the mathematical deduction and experimental results, the proposed scheme has the same image quality and payload as the simple LSB substitution scheme. In fact, our proposed data hiding scheme in the case of G1 (one bit Gray code) system is equivalent to the simple LSB substitution scheme.