Use the following steps in OS X Mountain Lion (10.8) and up to encrypt (and decrypt) external disks, including flash drives, from the Finder.
- Open a new Finder window and select the external drive you would like to encrypt from the panel on the left, under Devices.
- Right-click (or two-finger click, or control-click) on this disk in order to bring up a contextual menu, and then select Encrypt "External Drive Name"...
- When prompted to create an encryption password, use a strong password and enter it twice, along with a password hint, and click Encrypt Disk.
Result: The external disk will begin to encrypt, however, there is no progress bar to show you the process of the encryption, which could take as few as a couple of minutes up to several hours for large disks. The best way to tell that the encryption is taking place is to watch the activity indicator light for your disk, if it has one, and if it is blinking do not disconnect it as the encryption process is likely still in progress.
- Once encrypted, when you next plug your external drive in, you will be prompted to enter the password you created earlier and click Unlock in order to unlock the disk. If you would like to skip this step when accessing this disk on your primary Mac, you can choose to select the checkbox to Remember this password in my keychain.
If you at step 3 above you get an error message saying "A GUID Partitioning Table (GPT) partitioning scheme is required.", please go to this Knowledge Base article for a resolution.