© 2016 Elsevier Ltd. A novel nonlinear image encryption scheme based on a fully phase nonzero-order joint transform correlator architecture (JTC) in the Gyrator domain (GD) is proposed. In this encryption scheme, the two non-overlapping data distributions of the input plane of the JTC are fully encoded in phase and this input plane is transformed using the Gyrator transform (GT); the intensity distribution captured in the GD represents a new definition of the joint Gyrator power distribution (JGPD). The JGPD is modified by two nonlinear operations with the purpose of retrieving the encrypted image, with enhancement of the decrypted signal quality and improvement of the overall security. There are three keys used in the encryption scheme, two random phase masks and the rotation angle of the GT, which are all necessary for a proper decryption. Decryption is highly sensitivity to changes of the rotation angle of the GT as well as to little changes in other parameters or keys. The proposed encryption scheme in the GD still preserves the shift-invariance properties originated in the JTC-based encryption in the Fourier domain. The proposed encryption scheme is more resistant to brute force attacks, chosen-plaintext attacks, known-plaintext attacks, and ciphertext-only attacks, as they have been introduced in the cryptanalysis of the JTC-based encryption system. Numerical results are presented and discussed in order to verify and analyze the feasibility and validity of the novel encryption-decryption scheme.