Image Steganography is a thriving research area of information security where secret data is embedded in images to hide its existence while getting the minimum possible statistical detectability. This paper proposes a novel magic least significant bit substitution method (M-LSB-SM) for RGB images. The proposed method is based on the achromatic component (I-plane) of the hue-saturation-intensity (HSI) color model and multi-level encryption (MLE) in the spatial domain. The input image is transposed and converted into an HSI color space. The I-plane is divided into four sub-images of equal size, rotating each sub-image with a different angle using a secret key. The secret information is divided into four blocks, which are then encrypted using an MLE algorithm (MLEA). Each sub-block of the message is embedded into one of the rotated sub-images based on a specific pattern using magic LSB substitution. Experimental results validate that the proposed method not only enhances the visual quality of stego images but also provides good imperceptibility and multiple security levels as compared to several existing prominent methods.