In this work, a secure encryption technique for implementing reversible data hiding, named the Huffman Ciphersystem, is developed. First, a cover image is decomposed into two sub-images. The first sub-image consists of four most significant bits (MSBs), and the second sub-image consists of four least significant bits. The difference of adjacent MSB values for the first sub-image is calculated using inverse S scan order because it gives a confined and small range of difference values. It helps to attain an efficient lossless compression, enhancing our proposed work’s embedding capacity (EC). On the other hand, security is imparted by our proposed Huffman Ciphersystem by same level node exchange strategy followed by encryption of the dictionary via scrambling. The proposed scheme achieves a peak signal-to-noise ratio value of infinite for all the tested standard grayscale images at the recovery time. Experimental results demonstrate the proposed work’s superiority in EC and security of the encrypted images.