diff --git a/codegen/generate.go b/codegen/generate.go
index c142846d5..6f4a7835f 100644
--- a/codegen/generate.go
+++ b/codegen/generate.go
@@ -287,6 +287,33 @@ func RemoteStateConfigToTerraformCode(backend string, config map[string]interfac
 	return f.Bytes(), nil
 }
 
+// EncryptionConfigToTerraformCode converts the arbitrary map that represents a encryption config into HCL code to configure that remote state.
+func EncryptionConfigToTerraformCode(config map[string]interface{}) ([]byte, error) {
+	f := hclwrite.NewEmptyFile()
+	encryptionBlock := f.Body().AppendNewBlock("terraform", nil).Body().AppendNewBlock("encryption", nil)
+	encryptionBlockBody := encryptionBlock.Body()
+
+	var encryptionConfigKeys = make([]string, 0, len(config))
+
+	for key := range config {
+		encryptionConfigKeys = append(encryptionConfigKeys, key)
+	}
+
+	sort.Strings(encryptionConfigKeys)
+
+	for _, key := range encryptionConfigKeys {
+
+		ctyVal, err := convertValue(config[key])
+		if err != nil {
+			return nil, errors.New(err)
+		}
+
+		encryptionBlockBody.SetAttributeValue(key, ctyVal.Value)
+	}
+
+	return f.Bytes(), nil
+}
+
 func convertValue(v interface{}) (ctyjson.SimpleJSONValue, error) {
 	jsonBytes, err := json.Marshal(v)
 	if err != nil {
diff --git a/config/config.go b/config/config.go
index a44065842..0ccdf8e81 100644
--- a/config/config.go
+++ b/config/config.go
@@ -98,6 +98,7 @@ type TerragruntConfig struct {
 	TerraformVersionConstraint  string
 	TerragruntVersionConstraint string
 	RemoteState                 *remote.RemoteState
+	Encryption                  *Encryption
 	Dependencies                *ModuleDependencies
 	DownloadDir                 string
 	PreventDestroy              *bool
@@ -175,6 +176,20 @@ type terragruntConfigFile struct {
 	RemoteState     *remoteStateConfigFile `hcl:"remote_state,block"`
 	RemoteStateAttr *cty.Value             `hcl:"remote_state,optional"`
 
+	// We allow users to configure encryption via blocks:
+	//
+	// encryption {
+	//	 config = { ... }
+	// }
+	//
+	// Or as attributes:
+	//
+	// encryption = {
+	//	 config = { ... }
+	// }
+	Encryption     *encryptionConfigFile `hcl:"encryption,block"`
+	EncryptionAttr *cty.Value            `hcl:"encryption,optional"`
+
 	Dependencies             *ModuleDependencies `hcl:"dependencies,block"`
 	DownloadDir              *string             `hcl:"download_dir,attr"`
 	PreventDestroy           *bool               `hcl:"prevent_destroy,attr"`
@@ -283,6 +298,126 @@ type remoteStateConfigGenerate struct {
 	IfExists string `cty:"if_exists"`
 }
 
+// Configuration for Terraform encryption as parsed from a terragrunt.hcl config file
+type encryptionConfigFile struct {
+	Generate *encryptionConfigGenerate `hcl:"generate,attr"`
+	Config   cty.Value                 `hcl:"config,attr"`
+}
+
+type encryptionConfig struct {
+	KeyProvider map[string]map[string]interface{} `hcl:"key_provider,block"`
+	Method      map[string]map[string]interface{} `hcl:"method,block"`
+	State       map[string]interface{}            `hcl:"state,block"`
+	Plan        map[string]interface{}            `hcl:"plan,block"`
+}
+
+// Convert the parsed config file encryption struct to the internal representation struct of encryption
+// configurations.
+func (encryption *encryptionConfigFile) toConfig() (*Encryption, error) {
+	encryptionConfig, err := ParseCtyValueToMap(encryption.Config)
+	if err != nil {
+		return nil, err
+	}
+
+	config := &Encryption{}
+
+	if encryption.Generate != nil {
+		config.Generate = &EncryptionGenerate{
+			Path:     encryption.Generate.Path,
+			IfExists: encryption.Generate.IfExists,
+		}
+	}
+
+	config.Config.KeyProvider = encryptionConfig["key_provider"].(map[string]map[string]interface{})
+	config.Config.Method = encryptionConfig["method"].(map[string]map[string]interface{})
+	config.Config.State = encryptionConfig["state"].(map[string]interface{})
+	config.Config.Plan = encryptionConfig["plan"].(map[string]interface{})
+
+	config.FillDefaults()
+
+	if err := config.Validate(); err != nil {
+		return nil, err
+	}
+
+	return config, err
+}
+
+type encryptionConfigGenerate struct {
+	// We use cty instead of hcl, since we are using this type to convert an attr and not a block.
+	Path     string `cty:"path"`
+	IfExists string `cty:"if_exists"`
+}
+
+// EncryptionGenerate is code gen configuration for Terraform encryption
+type EncryptionGenerate struct {
+	Path     string `cty:"path" mapstructure:"path"`
+	IfExists string `cty:"if_exists" mapstructure:"if_exists"`
+}
+
+// Encryption is the configuration for Terraform encryption
+// NOTE: If any attributes are added here, be sure to add it to encryptionAsCty in config/config_as_cty.go
+type Encryption struct {
+	Generate *EncryptionGenerate `mapstructure:"generate" json:"Generate"`
+	Config   *encryptionConfig   `mapstructure:"config" json:"Config"`
+}
+
+// FillDefaults fills in any default configuration for encryption
+func (encryption *Encryption) FillDefaults() {
+	// Nothing to do
+}
+
+// Validate that the encryption is configured correctly
+func (encryption *Encryption) Validate() error {
+	if encryption.Config == nil {
+		return errors.New(ErrEncryptionConfigMissing)
+	}
+
+	return nil
+}
+
+// GenerateTerraformCode generates the terraform code for configuring encryption.
+func (encryption *Encryption) GenerateTerraformCode(terragruntOptions *options.TerragruntOptions) error {
+	if encryption.Generate == nil {
+		return errors.New(ErrGenerateCalledWithNoGenerateAttr)
+	}
+
+	// Make sure to strip out terragrunt specific configurations from the config.
+	config := encryption.Config
+
+	// Convert the IfExists setting to the internal enum representation before calling generate.
+	ifExistsEnum, err := codegen.GenerateConfigExistsFromString(encryption.Generate.IfExists)
+	if err != nil {
+		return err
+	}
+
+	configMap := map[string]interface{}{
+		"key_provider": config.KeyProvider,
+		"method":       config.Method,
+		"state":        config.State,
+		"plan":         config.Plan,
+	}
+	configBytes, err := codegen.EncryptionConfigToTerraformCode(configMap)
+	if err != nil {
+		return err
+	}
+
+	codegenConfig := codegen.GenerateConfig{
+		Path:          encryption.Generate.Path,
+		IfExists:      ifExistsEnum,
+		IfExistsStr:   encryption.Generate.IfExists,
+		Contents:      string(configBytes),
+		CommentPrefix: codegen.DefaultCommentPrefix,
+	}
+
+	return codegen.WriteToFile(terragruntOptions, terragruntOptions.WorkingDir, codegenConfig)
+}
+
+// Custom errors
+var (
+	ErrEncryptionConfigMissing          = errors.New("the encryption.config field cannot be empty")
+	ErrGenerateCalledWithNoGenerateAttr = errors.New("generate code routine called when no generate attribute is configured")
+)
+
 // Struct used to parse generate blocks. This will later be converted to GenerateConfig structs so that we can go
 // through the codegen routine.
 type terragruntGenerateBlock struct {
diff --git a/config/config_partial.go b/config/config_partial.go
index 6fc5527f4..6fa2db277 100644
--- a/config/config_partial.go
+++ b/config/config_partial.go
@@ -32,6 +32,7 @@ const (
 	TerragruntInputs
 	TerragruntVersionConstraints
 	RemoteStateBlock
+	EncryptionBlock
 )
 
 // terragruntIncludeMultiple is a struct that can be used to only decode the include block with labels.
@@ -95,6 +96,12 @@ type terragruntRemoteState struct {
 	Remain      hcl.Body               `hcl:",remain"`
 }
 
+// terragruntEncryption is a struct that can be used to only decode the encryption blocks in the terragrunt config
+type terragruntEncryption struct {
+	Encryption *encryptionConfigFile `hcl:"encryption,block"`
+	Remain     hcl.Body              `hcl:",remain"`
+}
+
 // terragruntInputs is a struct that can be used to only decode the inputs block.
 type terragruntInputs struct {
 	Inputs *cty.Value `hcl:"inputs,attr"`
@@ -208,6 +215,7 @@ func TerragruntConfigFromPartialConfig(ctx *ParsingContext, file *hclparse.File,
 //   - TerragruntVersionConstraints: Parses the attributes related to constraining terragrunt and terraform versions in
 //     the config.
 //   - RemoteStateBlock: Parses the `remote_state` block in the config
+//   - EncryptionBlock: Parses the `encryption` block in the config
 //
 // Note that the following blocks are always decoded:
 // - locals
@@ -415,6 +423,23 @@ func PartialParseConfig(ctx *ParsingContext, file *hclparse.File, includeFromChi
 				output.RemoteState = remoteState
 			}
 
+		case EncryptionBlock:
+			decoded := terragruntEncryption{}
+
+			err := file.Decode(&decoded, evalParsingContext)
+			if err != nil {
+				return nil, err
+			}
+
+			if decoded.Encryption != nil {
+				encryption, err := decoded.Encryption.toConfig()
+				if err != nil {
+					return nil, err
+				}
+
+				output.Encryption = encryption
+			}
+
 		default:
 			return nil, InvalidPartialBlockName{decode}
 		}
diff --git a/config/config_test.go b/config/config_test.go
index 0e01718ed..19916e569 100644
--- a/config/config_test.go
+++ b/config/config_test.go
@@ -1384,3 +1384,70 @@ func BenchmarkReadTerragruntConfig(b *testing.B) {
 		})
 	}
 }
+func TestParseTerragruntConfigEncryptionMinimalConfig(t *testing.T) {
+	t.Parallel()
+
+	cfg := `
+encryption {
+  config  = {}
+}
+`
+
+	ctx := config.NewParsingContext(context.Background(), mockOptionsForTest(t))
+	terragruntConfig, err := config.ParseConfigString(ctx, config.DefaultTerragruntConfigPath, cfg, nil)
+	require.NoError(t, err)
+
+	assert.Nil(t, terragruntConfig.Terraform)
+
+	assert.Empty(t, terragruntConfig.IamRole)
+
+	if assert.NotNil(t, terragruntConfig.Encryption) {
+		assert.Empty(t, terragruntConfig.Encryption.Config)
+	}
+}
+
+func TestParseTerragruntConfigEncryptionAttrMinimalConfig(t *testing.T) {
+	t.Parallel()
+
+	cfg := `
+encryption = {
+  config  = {}
+}
+`
+
+	ctx := config.NewParsingContext(context.Background(), mockOptionsForTest(t))
+	terragruntConfig, err := config.ParseConfigString(ctx, config.DefaultTerragruntConfigPath, cfg, nil)
+	require.NoError(t, err)
+
+	assert.Nil(t, terragruntConfig.Terraform)
+
+	assert.Empty(t, terragruntConfig.IamRole)
+
+	if assert.NotNil(t, terragruntConfig.Encryption) {
+		assert.Empty(t, terragruntConfig.Encryption.Config)
+	}
+}
+
+func TestParseTerragruntJsonConfigEncryptionMinimalConfig(t *testing.T) {
+	t.Parallel()
+
+	cfg := `
+{
+	"encryption": {
+		"config": {}
+	}
+}
+`
+
+	ctx := config.NewParsingContext(context.Background(), mockOptionsForTest(t))
+	terragruntConfig, err := config.ParseConfigString(ctx, config.DefaultTerragruntJSONConfigPath, cfg, nil)
+	require.NoError(t, err)
+
+	assert.Nil(t, terragruntConfig.Terraform)
+	assert.Nil(t, terragruntConfig.RetryableErrors)
+	assert.Empty(t, terragruntConfig.IamRole)
+
+	if assert.NotNil(t, terragruntConfig.Encryption) {
+		assert.Empty(t, terragruntConfig.Encryption.Config)
+	}
+}
diff --git a/config/dependency.go b/config/dependency.go
index 9b6eb7f6a..b329f3db2 100644
--- a/config/dependency.go
+++ b/config/dependency.go
@@ -767,6 +767,19 @@ func getTerragruntOutputJSON(ctx *ParsingContext, targetConfig string) ([]byte,
 		return runTerragruntOutputJSON(ctx, targetConfig)
 	}
 
+	encryptionTGConfig, err := PartialParseConfigFile(ctx.WithParseOption(parseOptions).WithDecodeList(EncryptionBlock, TerragruntFlags), targetConfig, nil)
+	if err != nil || !canGetEncryption(encryptionTGConfig.Encryption) {
+		targetOpts, err := cloneTerragruntOptionsForDependency(ctx, targetConfig)
+		if err != nil {
+			return nil, err
+		}
+
+		ctx.TerragruntOptions.Logger.Debugf("Could not parse encryption block from target config %s", targetOpts.TerragruntConfigPath)
+		ctx.TerragruntOptions.Logger.Debugf("Falling back to terragrunt output.")
+
+		return runTerragruntOutputJSON(ctx, targetConfig)
+	}
+
 	// In optimization mode, see if there is already an init-ed folder that terragrunt can use, and if so, run
 	// `terraform output` in the working directory.
 	isInit, workingDir, err := terragruntAlreadyInit(targetTGOptions, targetConfig, ctx)
@@ -778,7 +791,7 @@ func getTerragruntOutputJSON(ctx *ParsingContext, targetConfig string) ([]byte,
 		return getTerragruntOutputJSONFromInitFolder(ctx, workingDir, remoteStateTGConfig.GetIAMRoleOptions())
 	}
 
-	return getTerragruntOutputJSONFromRemoteState(ctx, targetConfig, remoteStateTGConfig.RemoteState, remoteStateTGConfig.GetIAMRoleOptions())
+	return getTerragruntOutputJSONFromRemoteState(ctx, targetConfig, remoteStateTGConfig.RemoteState, encryptionTGConfig.Encryption, remoteStateTGConfig.GetIAMRoleOptions())
 }
 
 // canGetRemoteState returns true if the remote state block is not nil and dependency optimization is not disabled
@@ -786,6 +799,11 @@ func canGetRemoteState(remoteState *remote.RemoteState) bool {
 	return remoteState != nil && !remoteState.DisableDependencyOptimization
 }
 
+// canGetEncryption returns true if the encryption block is not nil
+func canGetEncryption(encryption *Encryption) bool {
+	return encryption != nil
+}
+
 // terragruntAlreadyInit returns true if it detects that the module specified by the given terragrunt configuration is
 // already initialized with the terraform source. This will also return the working directory where you can run
 // terraform.
@@ -858,6 +876,7 @@ func getTerragruntOutputJSONFromInitFolder(ctx *ParsingContext, terraformWorking
 // To do this, this function will:
 // - Create a temporary folder
 // - Generate the backend.tf file with the backend configuration from the remote_state block
+// - Generate the encryption.tf file with the encryption configuration from the encryption block
 // - Copy the provider lock file, if there is one in the dependency's working directory
 // - Run terraform init and terraform output
 // - Clean up folder once json file is generated
@@ -866,6 +885,7 @@ func getTerragruntOutputJSONFromRemoteState(
 	ctx *ParsingContext,
 	targetConfigPath string,
 	remoteState *remote.RemoteState,
+	encryption *Encryption,
 	iamRoleOpts options.IAMRoleOptions,
 ) ([]byte, error) {
 	ctx.TerragruntOptions.Logger.Debugf("Detected remote state block with generate config. Resolving dependency by pulling remote state.")
@@ -932,6 +952,21 @@ func getTerragruntOutputJSONFromRemoteState(
 
 	ctx.TerragruntOptions.Logger.Debugf("Generated remote state configuration in working dir %s", tempWorkDir)
 
+	// Generate the encryption configuration in the working dir. If no generate config is set on the encryption block,
+	// set a temporary generate config so we can generate the backend code.
+	if encryption.Generate == nil {
+		encryption.Generate = &EncryptionGenerate{
+			Path:     "encryption.tf",
+			IfExists: codegen.ExistsOverwriteTerragruntStr,
+		}
+	}
+
+	if err := encryption.GenerateTerraformCode(targetTGOptions); err != nil {
+		return nil, err
+	}
+
+	ctx.TerragruntOptions.Logger.Debugf("Generated encryption configuration in working dir %s", tempWorkDir)
+
 	// Check for a provider lock file and copy it to the working dir if it exists.
 	terragruntDir := filepath.Dir(ctx.TerragruntOptions.TerragruntConfigPath)
 	if err := CopyLockFile(ctx.TerragruntOptions, terragruntDir, tempWorkDir); err != nil {