Abstract- This paper proposes a hardware-based speech encryption system. The system consists of compression, watermark and encryption. Uncompressed audio data are used for that system. Lossless compression is used for compressing that signal. In proposed system voice/ speech/ music will be sampled, compressed, watermarked and encrypted in the sender-end. Receiving-end will receive that signal and decrypt it. Watermark is extracted from decrypted signal. After extraction of watermark, audio signal is decompressed.