This is an amazing open source on-the-fly disk encryption software for Windows, Mac and Linux. You can encrypt entire disk (internal/external/USBs) as well as encrypt any files/folders into encrypted file which can be mounted later.
TrueCrypt has an fantastic feature of two levels of encryption which helps to protect the volume in case if you have to reveal the password. In this case he creates a Hidden Volume which will never be known to others and opened with another password. It uses Encryption Algorithm such as AES-256, Serpent, Twofish and mode of operation is XTS
Advantage is you don't need to decrypt every files/folders to view it. You just have to mount with correct password and it operates as normal volume.
Only disadvantage is that IF YOU FORGET THE PASSWORD, YOU WILL LOOSE ALL DATA.
READ THE DOCUMENTATION AND TUTORIAL BEFORE INSTALLING...
URL to site: http://www.truecrypt.org/