Abstract: With the advancement of technology and networking techniques, it is possible to transmit images at a lower bit rate and at the same time with high security. In order to fulfil the security needs of image transmission, several encryption, decryption and image encoding techniques have been put forward. The encryption discussed in this study is the PN (Pseudo Random Number) sequence based encryption using Joint Photographic Experts Group (JPEG) algorithm. In the proposed method, initially the image is portioned into blocks. Run length encoding is done for the level shifted image. Then Discrete Cosine Transform (DCT) and quantization was done and Difference of Quantized DC (DQDC) was calculated. Then the quantized blocks are shuffled based on the PN sequence and then the scrambled images are arranged in zigzag order. Then finally run length and Huffman lossless compression are done to eliminate the additional bits generated using PN codes. Metrics like correlation coefficient, Unified Average Changing Intensity (UACI), Number of Pixels Change Rate (NPCR) were computed to prove the sternness of the proposed method.