In cloud environment, the importance of security for the outsourced data has increased much, since the data is maintained and controlled by the semi‐trusted third‐party cloud providers. Data Security is one of the major factors to be considered in group data sharing. Using the secret key, the entire file is encrypted directly in a conventional security framework; however, in a cloud‐based environment for group mechanism, this framework cannot be applied as there is a problem of key distribution. This research paper proposes an efficient hierarchical‐based group key mechanism for a cloud‐based environment. This proposed system relies on Key Distribution Server (KDS), which performs cryptographic key operations for securing the data in the cloud. Also, this system uses logical key hierarchy (LKH) protocol to maintain hierarchical tree for scalability. The group key is generated using the group member secret values and a secret value assigned by the KDS server. Performance analysis of this system shows that the proposed key management system is more efficient and much suitable for cloud environment.