Yes, you can, at least in principle.
Ethereum is Turing-complete, so you can do whatever calculations you like. However, I don't know of any actual implementations that do this on-chain, and depending on the details of your encryption algorithms it may not be practical to do it within the gas limit. The upcoming Metropolis system upgrade may help, as it should include biginteger functionality that will make it easier and cheaper to do crypto stuff on-chain.
Whether this is a good idea is another question, though, depending on what you're trying to achieve. The private key and the decrypted data will be visible to anyone who can access the blockchain, and for most purposes this is the kind of thing you want to do off-chain in any case.