FileVault 2 not only encrypts your Mac’s internal drive, but it can also encrypt external drives connected via USB and FireWire (and we suspect you’ll be able to encrypt external drives connected via Thunderbolt, but Apple’s documentation doesn’t specify this). However, external drives must be formatted using HFS+. If you have an external drive you want to use with both Windows and a Mac, you have to use the FAT file format, and you can’t encrypt it.
To encrypt your external drive, you need to use Disk Utility (/Applications/Utilities) to reformat it. You can’t encrypt a drive that has data on it—that’s a major drawback if you have an existing hard drive with a ton of data and you want it encrypted. If you want to keep the data, you need to back it up and then copy it back to the drive after the reformatting.
One major caveat: During our testing, encrypted external hard drives could only be used on other Macs running Lion, and not with older versions of OS X. When we connected a drive encrypted using Lion’s Disk Utility to a MacBook Pro running Snow Leopard, a message appeared, stating that the drive required OS X 10.7.
Interested in encrypting your external hard drive? We’ll take you through the steps here.