Encrypt Your USB Drive with TrueCrypt
 

TrueCrypt allows you to make all kinds of encrypted containers, but one of the most interesting is a hidden partition. The trick here is to convert all of the space on a USB stick into an TrueCrypt container with a handful of interesting looking, but ultimately fake sensitive documents on it. This container is a genuine encrypted container secured by a strong passphrase. Under normal circumstances, the rest of the space on a TrueCrypt volume is always filled with random data, but when you create a hidden partition in that same space instead, it is not really random, but actually another encrypted volume with a different passphrase, inside which you can safely store your real sensitive documents.

http://www.linuxhaxor.net/2008/08/13...ith-truecrypt/