In this paper, we have presented an image encryption method in Chirp-Z transform domain using unequal modulus decomposition (UMD) and modified Gerchberg–Saxton (GS) algorithm. The proposed encryption scheme is highly sensitive to the encryption keys and the modified GS algorithm introduces an additional layer of security. The validity of the proposed method is tested with various grayscale and binary images and the numerical simulation results are demonstrated for ‘Cameraman’, ‘Medical’ and Binary ‘CUH’ images. The presented results confirm the robustness of the proposed method against various existing attacks such as, the noise attack, special attack, statistical attack, and brute force attack. A comparative analysis with existing similar methods is also performed and the enhanced security and efficiency of the proposed method is verified.