Abstract: The encryption system E0 in Bluetooth is generated from four LFSRs (Linear Feedback Shift Registers) by delay and combination. A new algorithm is introduced to attack E0 by using the correlation of its sequence. The average time complexities of the basic and the advance attacks respectively are O(283) and O(278). Base on the way of attacking means described in the paper, an improvement on E0 is made. In the end, some theory analysis and sample data are provided.