Communication of images has become very easy and frequent due to popularity of internet. But this fast moving world is prone to various threats from unauthorized users. To protect images and maintain privacy of data many data hiding and encryption techniques are developed. In this paper, a novel reversible 2-stage data hiding algorithm with chaotic based encryption using DNA encoding is proposed. Firstly, Integer Wavelet Transform (IWT) is applied on cover image to convert it from spatial to transform domain. Then, 1st level of data hiding is carried out using threshold based histogram shifting algorithm. Resultant image is interpolated to double of its size and second level of data hiding is done using adaptive prediction error expansion. This stego image is scrambled using chaotic logistic map, result is then DNA encoded using complementary rules. The encoded image is then XOR with a key image generated using hash function and chaotic map. Finally, encrypted image is obtained by DNA decoding the image. Simulation results obtained show the algorithm gives good embedding capacity; also the encrypted images are validated against key sensitivity, statistical and differential attacks. © 2020 IEEE.