From www.truecrypt.org : "TrueCrypt is a software system for establishing and maintaining an on-the-fly-encrypted volume (data storage device). On-the-fly encryption means that data are automatically encrypted or decrypted right before they are loaded or saved, without any user intervention. No data stored on an encrypted volume can be read (decrypted) without using the correct password/keyfile(s) or correct encryption keys. Entire file system is encrypted (e.g.., file names, folder names, contents of every file, free space, meta data, etc)."

    Another great feature of TrueCrypt is the Plausible Deniability factor. TrueCrypt can create a hidden encrypted volume inside a TrueCrypt volume that will look just like random data as the original TrueCrypt volume does. What this means is that if you are ever forced to decrypt your TrueCrypt volume you can and show off your not as private data all you want. The real juicy stuff you would keep in the hidden file and you can deny it is there. TrueCrypt volumes can not be distinguished from random data so there is no way to tell if there is or is not a hidden volume.

    In this article I am going to walk you through creating a TrueCrypt volume hidden inside another TrueCrypt volume so that you have plausible deniability. I am using a usb flash drive that is /dev/sda on my machine but you can use any disk, partition, or even a file by giving the name of the file you want to create as a TrueCrypt volume instead of the device file in my examples.