One of the fears in the field of communication is insecurity of data. Pseudo random noise (PRN), which is similar to noise and also fulfills a greater number of the standard tests for statistical randomness, can be used as a key for encryption. Using Legendre PN sequence which is based on prime numbers, an image encryption technique has been proposed in this paper. Based on the number of pixels in the image, Legendre sequences are generated for a set of prime numbers and concatenated to generate the required length sequence. This sequence is then used to encrypt the secret image that generates noise like pattern. This encrypted image is later embedded into a larger image using DCT technique to have double security. The proposed algorithm using Legendre sequence when tested on various images has always produced a PSNR value of cover image above 20, proving that changes made to cover image is very less. Identification of key to decrypt the original image is impossible to detect as multiple Legendre sequences are used to form PN sequence. Steganography with DCT adds to improvement in security. The above algorithm can be extended to color images and the robustness of the algorithm can be tested using different attacking methods.