Image encryption is one of the most important methods of image information hiding. A new image encryption method based on some techniques and knowledge of genetic engineering for image hiding is presented in this paper. This method is implemented by using modern biological techniques as tools and biological hard problems as main security basis to fully exert the special advantages. The keys are some substances of biological materials such as restriction endonuclease, polymerase and so on, the preparation flow and the experimental conditions. The analysis demonstrates that the image encryption algorithm is feasible and highly secure. Moreover, the size of the decrypted image is the same as the original image so that it can be applied for image hiding and be transmitted via the Internet.