diff --git a/website/source/docs/state/sensitive-data.html.md b/website/source/docs/state/sensitive-data.html.md
new file mode 100644
index 000000000..0ddbf3e9a
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@@ -0,0 +1,52 @@
+---
+layout: "docs"
+page_title: "State: Sensitive Data"
+sidebar_current: "docs-state-sensitive-data"
+description: |-
+  Sensitive data in Terraform state.
+---
+
+# Sensitive Data in State
+
+Terraform state can contain sensitive data depending on the resources in-use
+and your definition of "sensitive." The state contains resource IDs and all
+resource attributes. For resources such as databases, this may contain initial
+passwords.
+
+Some resources (such as RDS databases) have options for PGP encrypting the
+values within the state. This is implemented on a per-resource basis and
+you should assume the value is plaintext unless otherwise documented.
+
+When using local state, state is stored in plain-text JSON files. When
+using [remote state](/docs/state/remote.htm), state is only ever held in memory when used by Terraform.
+It may be encrypted at rest but this depends on the specific remote state
+backend.
+
+It is important to keep this in mind if you do (or plan to) store sensitive
+data (e.g. database passwords, user passwords, private keys) as it may affect
+the risk of exposure of such sensitive data.
+
+## Recommendations
+
+Storing state remotely may provide you encryption at rest depending on the
+backend you choose. As of Terraform 0.9, Terraform will only hold the state
+value in memory when remote state is in use. It is never explicitly persisted
+to disk.
+
+For example, encryption at rest can be enabled with the S3 backend and IAM
+policies and logging can be used to identify any invalid access. Requests for
+the state go over a TLS connection.
+
+[Terraform Enterprise](https://www.hashicorp.com/products/terraform/) is
+a commercial product from HashiCorp that also acts as a [backend](/docs/backends)
+and provides encryption at rest for state. Terraform Enterprise also knows
+the identity of the user requesting state and maintains a history of state
+changes. This can be used to provide access control and detect any breaches.
+
+## Future Work
+
+Long term, the Terraform project wants to further improve the ability to
+secure sensitive data. There are plans to provide a
+generic mechanism for specific state attributes to be encrypted or even
+completely omitted from the state. These do not exist yet except on a
+resource-by-resource basis if documented.
diff --git a/website/source/layouts/docs.erb b/website/source/layouts/docs.erb
index 1b1992046..1f42c1e32 100644
--- a/website/source/layouts/docs.erb
+++ b/website/source/layouts/docs.erb
@@ -180,6 +180,10 @@
 						<li<%= sidebar_current("docs-state-remote") %>>
 							<a href="/docs/state/remote.html">Remote State</a>
 						</li>
+
+						<li<%= sidebar_current("docs-state-sensitive-data") %>>
+							<a href="/docs/state/sensitive-data.html">Sensitive Data</a>
+						</li>
 					</ul>
 				</li>