IoT is growing in prominence as a result of its various applications across many industries. They gather information from the real world and send it over networks. The number of small computing devices, such as RFID tags, wireless sensors, embedded devices, and IoT devices, has increased significantly in the last few years. They are anticipated to produce enormous amounts of sensitive data for the purpose of controlling and monitoring. The security of those devices is crucial because they handle precious private data. An encryption algorithm is required to safeguard these delicate devices. The performance of devices is hampered by traditional encryption ciphers like RSA or AES, which are costly and easy to crack. In the realm of IoT security, lightweight image encryption is crucial. For image encryption, the majority of currently used lightweight techniques use separate pixel values and position modifications. These kinds of schemes are limited by their high vulnerability to cracking. This paper introduces a Lightweight cryptography (LWC) algorithm for medical IoT devices using Combined Transformation and Expansion (CTE) and Dynamic Chaos System. The suggested system is evaluated in terms of crossentropy, UACI, and NPCR. As demonstrated by the experimental results, the suggested system is ideal for medical IoT systems and has very high encryption and decryption efficiency. The proposed system is characterized by its low memory usage and simplicity.