Abstract In this paper, we present a color image encoding algorithm by combined use of the high-quality elemental image array (EIA) and the pseudo-random mask. To overcome low resolution drawbacks in widely used optical pickup system, in our scheme, the pseudo-inverse filter is introduced to improve this problem. In the cryptosystem, the proposed scheme provides high security because of the high key space of cellular automata. Meanwhile, the hologram-like attribute of the EIA can significantly improve the robustness of the encrypted image against some common image processing attacks. Experiments and analysis have both demonstrated the feasibility and efficiency of the image encryption algorithm.