This work introduces a modified ChaCha20 encryption algorithm, an improved variation of the ChaCha20 family, designed to provide superior security, enhanced efficiency, and optimal resource use for contemporary cryptographic applications. The proposed model enhances diffusion by employing a non-linear transformation function, ensuring that even minor alterations in input yield highly unpredictable outcomes. A distinctive permutation layer is incorporated following each set of quarter rounds to augment unpredictability and state mixing, fortifying resistance to statistical and differential attacks. The method employs a 20-round structure, alternating between column and diagonal quarter rounds, and incorporates an efficient state finalization technique that ensures security without significantly increasing computational demands. The proposed method demonstrates superior performance compared to ChaCha8, ChaCha12, ChaCha20, and SuperChaCha20, as evidenced by an improved avalanche effect (50.8462%), heightened Shannon entropy (0.99995), and reduced encryption time, thereby surpassing them in both security and efficiency. Furthermore, the model demonstrates minimal energy consumption (0.55 J) and improved memory efficiency (6 KB), making it suitable for IoT security, lightweight cryptographic applications, and real-time data encryption. The improved ChaCha20 Algorithm, characterized by rapid encryption, strong security, and efficient resource use, is a reliable cryptographic solution for contemporary secure communication networks.