Microsoft has collaborated with Signal to bring end-to-end encryption to Skype. Chats, photos, and audio messages are now encrypted at both ends while audio and voice calls are still on standard encryption.
The update to Skype means that all your files, chat, and audio messages will be transmitted securely to the recipient and vice versa. The messages will be readable only to the sender and the receiver and Microsoft claims no one else will be able to see them as they pass through their servers. It is similar to how messages on WhatsApp, Facebook Messenger and Telegram transmit messages securely.
The encryption, however, is not available for audio and video calls though. Those are only protected using standard encryption that Microsoft has been offering for long.
The encryption is available to the latest Skype Insider version for Mac, Windows, Linux, Android and iOS. Both the sender and the recipient needs to have the latest version to leverage the encrpytion feature. The public release of the feature is still awaited.