This is the software publisher's description.

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. The entire file system is encrypted (i.e., file names, folder names, contents of every file, and free space).

Files can be copied to and from a mounted TrueCrypt volume just like they are copied to/from any normal disk (for example, by simple drag-and-drop operations).

Files that are being read or copied from the encrypted TrueCrypt volume are automatically decrypted on-the-fly (in memory/RAM).

Similarly, files that are being written or copied to the TrueCrypt volume are automatically encrypted on-the-fly (right before they are written to the disk) in RAM.

Note that TrueCrypt never saves any decrypted data to a disk; it only stores them temporarily in RAM (memory). Even when the volume is mounted, data stored in the volume is still encrypted.

When you restart Windows or turn off your computer, the volume will be dismounted and files stored in it will be inaccessible (and encrypted).

Even when power supply is suddenly interrupted (without proper system shut down), files stored in the volume are inaccessible (and encrypted). To make them accessible again, you have to mount the volume (and provide the correct password and/or keyfile).