An encryption processing system and method are provided in a mobile communication system having an AT, an AN for sending packet data to the AT on a radio channel, a PCF for controlling the AN, and a PDSN for sending packet data to the AN through the PCF. The AT encrypts a packet generated upon user request and sends the encrypted packet on a radio channel. If it is indicated that the packet received from the AT was encrypted, the AN requests encryption information of the AT to the PCF and decrypts the encryption information received from the PCF. Upon receipt of the request of the encryption information of the AT from the AN, the PCF determines whether the AT is authenticated, extracts the encryption information of the AT if the AT is authenticated, and sends the extracted encryption information to the AN.