Encryption algorithm based on chaotic sequenceshave become an often-used encryption method, owing to its ease of generation, sensitive to its initial condition, complex pseudo-random. The authors discuss an encryption algorithm based on chaotic sequences. The algorithm needs to generate two chaotic sequencesand uses m-sequencesas the perturbation sequencein order to enhance security. According to the algorithm mentioned above, they design the encryption and decryptionchip using AHDL(Altera Hardware Description Language)and implement it with CPLD.