A data encryption engine and method for using to selectively encrypt communications. Data is received from a source device into the data encryption engine. The data encryption engine determines whether or not to encrypt the data based on a source device preference, a target device preference, a comparison of priority numbers for the source device and target device, the transport medium, the relationship between the source device and target device, a type/level of encryption or some combination. If the data is determined to need encryption, the data encryption device may encrypt the data or may flag the data for encryption by the target device. Otherwise the unencrypted data may be forwarded to the target device.