In Disk Utility -> New Image, select size, properties and encryption
type (AES 128 or 256) and Create.

Then mount and use your encrypted disks as needed.

Just as an aside: on 10.5 and upwards I have taken to using encrypted sparse bundles rather than simple images; the advantage of doing this is that if you are creating a encrypted filesystem on (say) a 16Gb FAT-32 USB stick, then:

a) you are not constrained to a 4Gb encrypted image (otherwise to FAT32)
b) when using the sparse image, your files can be >4Gb
c) you do not eat the entire stick all at once
d) there can be (is?) a degree of garbage collection
e) the stick is still usable as FAT32

        - alec


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