In response to the issue of poor authentication effectiveness in traditional encryption and authentication systems, an Internet of Things (IoT)-based 5G power business user identity encryption and authentication system is proposed. In terms of hardware, an encryption chip, a communicator, and an identity recognizer are designed. On the software side, leveraging the information transmission model of the Internet of Things, the identity information of power business users are input to ensure the integrity of the identity information. Using cryptographic Hash function, the Hash values of different data information are calculated to encrypt the user identity information. The authentication of the encrypted user identity is completed through the authentication code generated by the terminal device. Through the above hardware and software designs, the 5G power business user identity encryption and authentication system is completed. In simulation experiments, compared with previous 5G power business user identity encryption and authentication systems, the proposed IoT-based 5G power business user identity encryption and authentication system has an average memory leak value of 32 MB, with better authentication performance and greater application value.