Recently, a number of location-based services such as navigation and mobile advertising have been proposed. Such services require real-time user positions. Since a global positioning system (GPS), which is one of the most well-known techniques for real-time positioning, is unsuitable for indoor uses due to unavailability of GPS signals, many indoor positioning systems (IPSs) using WLAN, radio frequency identification tags, and so forth have been proposed. However, most of them suffer from high installation costs. In this paper, we propose a novel IPS for real-time positioning that utilizes a digital audio watermarking technique. The proposed IPS first embeds watermarks into an audio signal to generate watermarked signals, each of which is then emitted from a corresponding speaker installed in a target environment. A user of the proposed IPS receives the watermarked signals with a mobile device equipped with a microphone, and the watermarks are detected in the received signal. For positioning, we model various effects upon watermarks due to propagation in the air, i.e., delays, attenuation, and diffraction. The model enables the proposed IPS to accurately locate the user based on the watermarks detected in the received signal. The proposed IPS can be easily deployed with a low installation cost because the IPS can work with off-the-shelf speakers that have been already installed in most of the indoor environments such as department stores, amusement arcades, and airports. We experimentally evaluate the accuracy of positioning and show that the proposed IPS locates the user in a 6m by 7.5m room with root mean squared error of 2.25m on average. The results also demonstrate the potential capability of real-time positioning with the proposed IPS.