AbstractThe smart grid network (SGN) is expected to leverage advances in the Internet of Things (IoT) to enable effective delivery and monitoring of energy. By integrating communication, computing, and information tools like smart sensors and meters to facilitate the process of monitoring, predictions, and management of power usage, the SGN can improve competence of power‐grid architecture. However, the effective deployment of IoT‐powered SGNs hinges on the deployment of strong security protocols. With the advent of quantum computers, classic cryptographic algorithms based on integer factorization and the Diffie‐Hellman assumptions may not be suitable to secure the sensitive data of SGNs. Therefore, in this paper, a secure quantum‐safe mutual authentication and key‐exchange (MAKe) mechanism is proposed for SGNs, that make use of the hard assumptions of small integer solution and inhomogeneous small integer solution problems of lattice. The proposed protocol is intended to offer confidentiality, anonymity, and hashed‐based mutual authentication with a key‐exchange agreement. Similarly, this scheme allows creation and validation of the mutual trust among the smart‐meters (SMs) and neighbourhood‐area network gateway over an insecure wireless channel. A random oracle model is then used to perform the formal security analysis of the proposed approach. A thorough formal analysis demonstrates proposed algorithm's ability to withstand various known attacks. The performance analysis shows that the proposed approach outperforms other comparative schemes with respect to at least 22.07% of minimal energy utilization, 51.48% effective storage and communications costs, as well as 76.28% computational costs, and thus suitable for resource‐constrained SGNs.