Creating an encrypted disk image on a Mac

The steps here show the basic outline, but Apple change the details with each new version of the Operating System. Take these steps as a guide.

1. Open Disk Utility found in the Utilities folder (/Applications/Utilities).
2. Click the New Image button, or choose New then Blank Disk Image from the Disk Utility File menu.
3. Enter a name in the Save As: field. This name is used for the disk image (.dmg) file.
4. Change the save destination if you wish to.
5.  
6. Change the volume name to match the disk image name.
7. Select a size for the image file from the Volume Size drop-down menu, or use Custom to set the space you require.
8. The default Mac OS X Extended (Journaled) volume format will be correct in most cases, if you wish to change it use the drop-down menu.
9. Choose an image format. You can use sparse disk image for a disk image that only uses as much space as it needs, rather than a set amount of space. If you're not sure use the read/write disk image choice.
10. From the Encryption: drop-down choose 256-bit AES if available, otherwise choose 128-bit AES to encrypt the image's contents with a password.
11. Click the Create button.
12. Enter and verify a good password in the dialog window that appears. This password will be saved in your keychain by default, it is recommended that you deselect this.  Note: If you forget this password then the files stored within the disk image will be inaccessible.
13. Click OK.