We develop a two-dimensional enhanced hyperchaotic Henon map (2D-EHHM) to overcome the problems of small chaotic range and poor security when the 2-D traditional Henon map is implemented in cryptosystems. The performance evaluations show that the 2D-EHHM has wider chaotic range, higher chaotic complexity, better ergodicity, and hyperchaotic behavior compared with certain existing chaotic maps. Based on the 2D-EHHM, we further design an efficient image encryption algorithm consisting of a multiple block substitution stage (MBSS) and a bidirectional-dynamic diffusion stage (BDDS). In the MBSS, a plain image is divided into several nonoverlapping multiple blocks to carry out permutation operation. In the BDDS, the scrambled image is redivided into nonoverlapping sub-blocks of the same size to be diffused dynamically in the forward and backward directions. Moreover, the SHA 512 function is employed to obtain a 512-bit plain image hash value treated as a raw key. A variable-length secret key (at least 128 bits), which is dynamically selected from the raw key and regarded as a valid key, is utilized to generate the initial values for the chaotic system. Simulation results and security analysis show that the proposed algorithm can resist various cryptanalytic attacks and can be applied to real-time data transmission.