diff --git a/doc/README b/doc/README
index a4df4c227b..421c83cd53 100644
--- a/doc/README
+++ b/doc/README
@@ -24,6 +24,44 @@ Unpack the files into a directory and run:
  bin/64/bitcoin (GUI, 64-bit)
  bin/64/bitcoind (headless, 64-bit)
 
+
+Wallet Encryption
+-----------------
+Bitcoin supports native wallet encryption so that people who steal your wallet
+file don't automatically get access to all of your Bitcoins.  In order to enable
+this feature, chose "Encrypt Wallet" from the Options menu.  You will be prompted
+to enter a passphrase, which will be used as the key to encrypt your wallet and
+will be needed every time you wish to send Bitcoins.  If you lose this passphrase,
+you will lose access to spend all of the bitcoins in your wallet, no one, not even
+the Bitcoin developers can recover your Bitcoins.  This means you are responsible
+for your own security, store your password in a secure location and do not forget
+it.
+
+Remember that the encryption built into bitcoin only encrypts the actual keys
+which are required to send your bitcoins, not the full wallet.  This means that
+someone who steals your wallet file will be able to see all the addresses which
+belong to you, as well as the relevant transactions, you are only protected from
+someone spending your coins.
+
+It is recommended that you backup your wallet file before you encrypt your wallet.
+To do this, close the Bitcoin client and copy the wallet.dat file from ~/.bitcoin/
+on Linux, /Users/(user name)/Application Support/Bitcoin/ on Mac OSX, and
+%APPDATA%/Bitcoin/ on Windows (that is /Users/(user name)/AppData/Roaming/Bitcoin on
+Windows Vista and 7 and /Documents and Settings/(user name)/Application Data/Bitcoin
+on Windows XP).  Once you have copied that file to a safe location, reopen the
+Bitcoin client and Encrypt your wallet.  If everything goes fine, delete the backup
+and enjoy your encrypted wallet.  Note that once you encrypt your wallet, you will
+never be able to go back to a version of the Bitcoin client older than 0.4.
+
+Keep in mind that you are always responsible for you own security.  All it takes is a
+slightly more advanced wallet-stealing trojan which installs a keylogger to steal
+your wallet passphrase as you enter it in addition to your wallet file and you have
+lost all your Bitcoins.  Wallet encryption cannot keep you safe if you do not practice
+good security, such as running up-to-date antivirus software, only entering your
+wallet passphrase in the Bitcoin client and using the same passphrase only as your
+wallet passphrase.
+
+
 See the documentation at the bitcoin wiki:
   https://en.bitcoin.it/wiki/Main_Page