An encrypted USB flash drive is a USB flash drive featuring hardware encryption, and first seems to have appeared in 2004.
There are usually two separate partitions on the drive; one is a read-only partition that contains the encryption software, the other is the secure encrypted partition that is only accessible once the correct password is entered. Most drives use Advanced Encryption Standard (AES) encryption. The drives may have a feature whereby if an incorrect password is entered too many times, the secure partition becomes inaccessible and will need to be reformatted.
As the encryption software is run from the drive itself, nothing needs to be installed on the computer which makes it easier to use than having to install the necessary software on each computer that the drive will be used on, but makes the drive vulnerable if the software no longer runs in newer operating systems.