How to create an encrypted volume on an external drive or flash drive How do you encrypt an external hard/flash drive connected to my Mac in Lion 10.7? Preferable something with a strong encryption as FileVault.
The best way to do this is via Disk Utility in the Application/Utilities folder. 
Review pictures for better understanding

Select the disk you want to encrypt


Choose the format method as in the picture, making sure you choose the option with Encryption


Next time you connect the disk, you will be asked to enter password.