Abstract: There is disclosed a data encryption system for use in a computer system having at least one disc drive. A first memory is used for storing an encryption key and a second memory is used for storing data. Data from the second memory is logically combined with selected portions of the encryption key by a gate. Control hardware and software controls the reading and writing of data onto the disc, routing the data through the gate so that the data is automatically encrypted as it is written onto the disc and decoded as it is read from the disc. Furthermore, an encryption key portion selection circuit controls the first memory so that it outputs a sequence of selected portions of the encryption key for use by the gate as data flows through the gate. The selected portions of the encryption key correspond to the disc location where the data is stored or is to be stored.