In　the　paper,　we　bring　forward　an　image　encryption　algorithm　during　the　process　of　JPEG　compression.　According　to　the　chaotic　theory　of　dynamic　systems　and　modern　cryptography,　we　solved　the　following　technique,　First,　how　to　generate　chaotic　sequence　having　good　randomness　according　to　the　characteristic　that　Logistic　chaotic　systems　are　extremely　sensitive　to　the　initial　condition?　Secondly,　how　to　create　a　series　of　one-way　hash　being　as　block　key　from　the　chaotic　sequences?　Thirdly,　during　the　process　of　JPEG　compression　coding,　how　to　implement　the　image　compression　and　encryption　by　using　the　block　cipher?　In　the　analysis　of　the　algorithm,　we　discuss　the　randomness　of　the　chaotic　sequence　in　detail.　We　also　analyze　the　security　and　anti-collision　of　the　chaotic　hash　sequence　by　several　variant　methods.　The　results　indicate　that　our　algorithm　completely　satisfied　the　security　requirement　in　the　sense　of　cryptography.