The rapid evolution of the Internet of Things (IoT) has significantly transformed various aspects of both personal and professional spheres, offering innovative solutions in fields from home automation to industrial manufacturing. This progression is driven by the integration of physical devices with digital networks, facilitating efficient communication and data processing. However, such advancements bring forth critical security challenges, especially regarding data privacy and network integrity. Conventional cryptographic methods often fall short in addressing the unique requirements of IoT environments, such as limited device computational power and the need for efficient energy consumption. This paper introduces a novel approach to IoT security, inspired by the principles of steganographythe art of concealing information within other non-secret data. This method enhances security by embedding secret information within the payload or communication protocols, aligning with the low-power and minimal processing capabilities of IoT devices. We propose a steganographic key generation algorithm, adapted from the Diffie-Hellman key exchange model, tailored for IoT. This approach eliminates the need for explicit parameter exchange, thereby reducing vulnerability to key interception and unauthorized access, prevalent in IoT networks. The algorithm utilizes a pre-shared 2D matrix and a synchronized seed-based approach for covert communication without explicit data exchange. Furthermore, we have rigorously tested our algorithm using the NIST Statistical Test Suite (STS), comparing its execution time with other algorithms. The results underscore our algorithm's superior performance and suitability for IoT applications, highlighting its potential to secure IoT networks effectively without compromising on efficiency and device resource constraints. This paper presents the design, implementation, and potential implications of this algorithm for enhancing IoT security, ensuring the full realization of IoT benefits without compromising user security and privacy.