diff --git a/README.md b/README.md
index a8bd09c..a6bd5e4 100644
--- a/README.md
+++ b/README.md
@@ -49,6 +49,12 @@ pg_user "myuser" do
   password "mypassword"
 end
 
+# create a user with an MD5-encrypted password
+pg_user "myuser" do
+  privileges :superuser => false, :createdb => false, :login => true
+  encrypted_password "667ff118ef6d196c96313aeaee7da519"
+end
+
 # drop a user
 pg_user "myuser" do
   action :drop
@@ -453,4 +459,4 @@ Many thanks go to the following who have contributed to making this cookbook eve
 
 * Freely distributable and licensed under the [MIT license](http://phlipper.mit-license.org/2012/license.html).
 * Copyright (c) 2012 Phil Cohen (github@phlippers.net) [![endorse](http://api.coderwall.com/phlipper/endorsecount.png)](http://coderwall.com/phlipper)
-* http://phlippers.net/
+* http://phlippers.net/
\ No newline at end of file
diff --git a/definitions/pg_user.rb b/definitions/pg_user.rb
index ea3a7e5..a7bcfee 100644
--- a/definitions/pg_user.rb
+++ b/definitions/pg_user.rb
@@ -7,12 +7,14 @@
       :login => true
     }
     privileges.merge! params[:privileges] if params[:privileges]
-    
+
     sql = [params[:name]]
-    
+
     sql.push privileges.to_a.map! { |p,b| (b ? '' : 'NO') + p.to_s.upcase }.join ' '
 
-    if params[:password]
+    if params[:encrypted_password]
+      sql.push "ENCRYPTED PASSWORD '#{params[:encrypted_password]}'"
+    elsif params[:password]
       sql.push "PASSWORD '#{params[:password]}'"
     end
 
@@ -24,7 +26,7 @@
 
     execute "altering pg user #{params[:name]}" do
       user "postgres"
-      command "psql -c \"ALTER ROLE #{sql}\"" 
+      command "psql -c \"ALTER ROLE #{sql}\""
       only_if exists, :user => "postgres"
     end
 
@@ -40,4 +42,4 @@
       command "psql -c \"DROP ROLE IF EXISTS #{params[:name]}\""
     end
   end
-end
+end
\ No newline at end of file