For the purpose of color image encryption using two keys, a method based on grating modulation is proposed. First of all, a color image is separated into three components: red, green, and blue. The three grey images are multiplied by sine gratings with different spatial frequencies, and a superposition of the modulated results is introduced. Thus a real-valued target image that contains the whole information of the color image is obtained. Then the target image is encrypted using double phase encoding system, which means the original color image is encrypted. Due to the introduction of the sine gratings, the R, G, B frames are able to be spatially separated, so the color map can be reconstructed and the original color image can be recovered. Both theoretical analysis and simulations are proposed, and the validity of this method is verified by experimental results.