Preferential attachment models have been widely studied in complex networks, because they can explain the formation of many networks like social networks, citation networks, power grids, and biological networks, to name a few. Motivated by the application of key predistribution in wireless sensor networks (WSN), we initiate the study of preferential attachment with degree bound. Our paper has two important contributions to two different areas. The first is a contribution in the study of complex networks. We propose preferential attachment model with degree bound for the first time. In the normal preferential attachment model, the degree distribution follows a power law, with many nodes of low degree and a few nodes of high degree. In our scheme, the nodes can have a maximum degree $d_{\max}$, where $d_{\max}$ is an integer chosen according to the application. The second is in the security of wireless sensor networks. We propose a new key predistribution scheme based on the above model. The important features of this model are that the network is fully connected, it has fewer keys, has larger size of the giant component and lower average path length compared with traditional key predistribution schemes and comparable resilience to random node attacks. We argue that in many networks like key predistribution and Internet of Things, having nodes of very high degree will be a bottle-neck in communication. Thus, studying preferential attachment model with degree bound will open up new directions in the study of complex networks, and will have many applications in real world scenarios.