Since a chaotic attractor can be reconstructed with time-delay embedding method in dissipative chaotic systems, there are potential problems in chaos-based information encryption. Concerning this issue, we report a conservative-chaos-based key distribution protocol and image encryption algorithm. The encryption algorithm converts image data into initial value of a conservative chaotic system with Hash algorithm and forms an encryption mechanism of one-time pads. Then, a binary keystream is generated by combining conservative chaos with key distribution protocol, which is completed by both sender and receiver. The obtained binary keystream shuffles and diffuses the image data to obtain an encrypted image. It shows that the proposed algorithm is safe and reliable. It hides effectively a plain image, and resists common decryption algorithms. Besides, conservative chaos has no attractor thus the encryption algorithm is hard to crack.