The theory and application of cellular automata (CA) for a stream cipher-based encryption principle are presented in this study. Certain fundamental transformations are developed based on CA theory regarding decentralized computation for modeling different system’s behavior. The changes governing state transitions rely on simple evolution rules, which can easily be translated into functions using logic operators. A class of linear hybrid cellular automata (LHCA) based on rules 90 and 150 is used to implement these functions. Symmetric key systems theory is the foundation of the suggested algorithm. The algorithm functions use the proprieties provided by the LHCA evolution in order to convert plain text into cipher text and vice versa, in each case starting from the same initial state of the system and performing the same number of steps for each operation. Cellular automata’s parallel information processing property, in addition to their regular and dynamical structure, makes hardware implementation of such schemes best suited for VLSI implementation. Testing of the proposed algorithm was performed by developing both software and hardware solutions. Hardware implementation of the presented cryptosystem was developed using VHDL hardware description language and a FPGA device (XILINX Spartan3E XC3S500E). Design and software simulations have been carried out using the C# programming language.