An encryption scheme based on multi-level discrete wavelet transform (DWT) and hyperchaotic system is proposed in this paper. Firstly, several random key streams are produced by a 4D hyperchaotic system. Secondly, the multiple wavelet transform is applied to obtain wavelet coefficients that carry the approximate information of the image. Thirdly, the wavelet coefficients are encrypted using the random chaotic sequences and then converted to an image via multi-level inverse discrete wavelet transform (IDWT). Finally, a diffusion process is applied to the pixels to enhance the randomness in the cipher image. The security analysis results show that our scheme is highly secure and has good statistical properties.