TrueCrypt can create a virtual encrypted disk within a file and mount it as a real disk, or an entire hard disk partition or a device, such as USB memory stick, floppy disk, etc.

This software provides two levels of security: a hidden volume (more information may be found here), and a volume cannot be identified (no part of the volume can be distinguished from random data).

It utilizes the following encryption algorithms: AES (256-bit key), Blowfish (448-bit key), CAST5 (128-bit key), Serpent (256-bit key), Triple DES, and Twofish (256-bit key), and also supports cascading (e.g., AES-Serpent-Twofish).

It is based on Encryption for the Masses (E4M) 2.02a, conceived in 1997.

Features:

• Creates a virtual encrypted disk within a file and mounts it as a real disk.
• Encrypts an entire partition or storage device such as USB flash drive or hard drive.
• Encrypts a partition or drive where Windows is installed (pre-boot authentication).
• Encryption is automatic, real-time (on-the-fly) and transparent.
• Provides plausible deniability, in case an adversary forces you to reveal the password: Hidden volume (steganography) and hidden operating system.
• Encryption algorithms: AES-256, Serpent, and Twofish. Mode of operation: XTS.

What's New in version 6.3:

New features:

• ull support for Windows 7.
• Full support for Mac OS X 10.6 Snow Leopard.
• The ability to configure selected volumes as 'system favorite volumes'. This is useful, for example, when you have volumes that need to be mounted before system and application services start and before users start logging on. It is also useful when there are network-shared folders located on a TrueCrypt volume and you need to ensure that the network shares will be restored by the system each time it is restarted. For more information, see the chapter 'Main Program Window', section 'Program Menu', subsection 'Volumes -> Save Currently Mounted Volumes as Favorite' in the documentation. (Windows)

Improvements and bug fixes:

• 'Favorite' volumes residing within partitions or dynamic volumes will no longer be affected by changes in disk device numbers, which may occur, e.g., when a drive is removed or added. (Windows)
• Many other minor improvements and bug fixes. (Windows, Mac OS X, and Linux)