A system and method of processing an encrypted instruction stream in hardware is disclosed. Main memory stores the encrypted instruction stream and unencrypted data. A central processing unit (CPU) is operatively coupled to the main memory. A decryptor is operatively coupled to the main memory and located within the CPU. The decryptor decrypts the encrypted instruction stream upon receipt of an instruction fetch signal from a CPU core. Unencrypted data is passed through to the CPU core without decryption upon receipt of a data fetch signal.