In secure sensor-based applications, generating unique and secure credentials is crucial for ensuring trust and privacy. Traditionally, pseudo-random number generators have been used for this purpose. However, biometric data, especially fingerprint features, has emerged as a robust alternative. This article proposes a dynamic approach for generating a privacy-preserving unique identity from fingerprint sensor data. The method isolates a region of interest (ROI) from the fingerprint image and extracts two feature sets: minutiae-based data and texture-based information. These features are combined and optimized to produce a hybrid feature vector containing discriminative and relevant attributes. A unique identity (termed a key) is then dynamically generated from this vector, characterized by reliability, revocability, unlinkability, and irreversibility. Extensive evaluations using fingerprint images from sensors of varying quality and resolution have demonstrated the method’s robustness. The generated identities have been statistically validated using NIST and Diehard test suites, confirming strong adherence to randomness requirements. Also, comprehensive security analyses have shown resilience against different adversarial attacks. Notably, the approach avoids storing biometric data or generated identities, enhancing privacy protection. These features make the proposed method ideal for secure sensor-based applications such as authentication, data storage security, and digital signature schemes.