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The mobile IP authentication, authorization, and accounting (AAA) framework architecture is designed to protect signaling messages from eavesdropping by malicious attackers. The message exchanges for AAA incur heavy signaling overhead and long network access latency for mobility service. To solve this problem, the most typical approach is to adopt a key caching mechanism so that the authentication can locally be done and so that the signaling overhead can be significantly reduced. However, in the literature, very little work has conducted a thorough analytical study on the proposed key caching scheme. As a result, the statistical behavior of these schemes cannot be well justified. In this paper, we develop an analytical model that describes the key caching behavior in mobile IP networks. The accuracy of this model is validated by simulations. Based on the performance analysis, we then propose an adaptive algorithm that dynamically adjusts key cache size so that the signaling overhead can be minimized.