diff --git a/src/main/java/com/velocitypowered/proxy/VelocityServer.java b/src/main/java/com/velocitypowered/proxy/VelocityServer.java
index 524bf4e5b..00226aef0 100644
--- a/src/main/java/com/velocitypowered/proxy/VelocityServer.java
+++ b/src/main/java/com/velocitypowered/proxy/VelocityServer.java
@@ -4,6 +4,7 @@ import com.velocitypowered.proxy.connection.MinecraftConnection;
 import com.velocitypowered.proxy.protocol.StateRegistry;
 import com.velocitypowered.proxy.protocol.netty.MinecraftPipelineUtils;
 import com.velocitypowered.proxy.connection.client.HandshakeSessionHandler;
+import com.velocitypowered.proxy.protocol.packets.EncryptionRequest;
 import io.netty.bootstrap.Bootstrap;
 import io.netty.bootstrap.ServerBootstrap;
 import io.netty.channel.*;
@@ -30,6 +31,10 @@ public class VelocityServer {
         return server;
     }
 
+    public KeyPair getServerKeyPair() {
+        return serverKeyPair;
+    }
+
     public void initialize() {
         // Create a key pair
         try {
diff --git a/src/main/java/com/velocitypowered/proxy/connection/client/LoginSessionHandler.java b/src/main/java/com/velocitypowered/proxy/connection/client/LoginSessionHandler.java
index 8fe8bd57b..3831b1a4f 100644
--- a/src/main/java/com/velocitypowered/proxy/connection/client/LoginSessionHandler.java
+++ b/src/main/java/com/velocitypowered/proxy/connection/client/LoginSessionHandler.java
@@ -3,6 +3,7 @@ package com.velocitypowered.proxy.connection.client;
 import com.google.common.base.Preconditions;
 import com.velocitypowered.proxy.protocol.MinecraftPacket;
 import com.velocitypowered.proxy.protocol.StateRegistry;
+import com.velocitypowered.proxy.protocol.packets.EncryptionRequest;
 import com.velocitypowered.proxy.protocol.packets.ServerLogin;
 import com.velocitypowered.proxy.protocol.packets.ServerLoginSuccess;
 import com.velocitypowered.proxy.connection.MinecraftConnection;
@@ -13,9 +14,11 @@ import com.velocitypowered.proxy.data.ServerInfo;
 import com.velocitypowered.proxy.util.UuidUtils;
 
 import java.net.InetSocketAddress;
+import java.util.concurrent.ThreadLocalRandom;
 
 public class LoginSessionHandler implements MinecraftSessionHandler {
     private final MinecraftConnection inbound;
+    private ServerLogin login;
 
     public LoginSessionHandler(MinecraftConnection inbound) {
         this.inbound = Preconditions.checkNotNull(inbound, "inbound");
@@ -23,12 +26,27 @@ public class LoginSessionHandler implements MinecraftSessionHandler {
 
     @Override
     public void handle(MinecraftPacket packet) {
-        Preconditions.checkArgument(packet instanceof ServerLogin, "Expected a ServerLogin packet, not " + packet.getClass().getName());
+        if (packet instanceof ServerLogin) {
+            this.login = (ServerLogin) packet;
+            // TODO: Online-mode checks
+            handleSuccessfulLogin();
+        }
+    }
 
-        // TODO: Encryption
+    private EncryptionRequest generateRequest() {
+        byte[] verify = new byte[4];
+        ThreadLocalRandom.current().nextBytes(verify);
+
+        EncryptionRequest request = new EncryptionRequest();
+        request.setPublicKey(VelocityServer.getServer().getServerKeyPair().getPublic().getEncoded());
+        request.setVerifyToken(verify);
+        return request;
+    }
+
+    private void handleSuccessfulLogin() {
         inbound.setCompressionThreshold(256);
 
-        String username = ((ServerLogin) packet).getUsername();
+        String username = login.getUsername();
         ServerLoginSuccess success = new ServerLoginSuccess();
         success.setUsername(username);
         success.setUuid(UuidUtils.generateOfflinePlayerUuid(username));
@@ -43,5 +61,4 @@ public class LoginSessionHandler implements MinecraftSessionHandler {
         inbound.setSessionHandler(new InitialConnectSessionHandler(player));
         connection.connect();
     }
-
 }
diff --git a/src/main/java/com/velocitypowered/proxy/protocol/StateRegistry.java b/src/main/java/com/velocitypowered/proxy/protocol/StateRegistry.java
index 89df63337..ff2d598cf 100644
--- a/src/main/java/com/velocitypowered/proxy/protocol/StateRegistry.java
+++ b/src/main/java/com/velocitypowered/proxy/protocol/StateRegistry.java
@@ -34,6 +34,7 @@ public enum StateRegistry {
     LOGIN {
         {
             TO_SERVER.register(0x00, ServerLogin.class, ServerLogin::new);
+            TO_SERVER.register(0x01, EncryptionResponse.class, EncryptionResponse::new);
 
             TO_CLIENT.register(0x00, Disconnect.class, Disconnect::new);
             TO_CLIENT.register(0x01, EncryptionRequest.class, EncryptionRequest::new);
diff --git a/src/main/java/com/velocitypowered/proxy/protocol/compression/VelocityCompressor.java b/src/main/java/com/velocitypowered/proxy/protocol/compression/VelocityCompressor.java
index ca3872b5a..8c1eaca15 100644
--- a/src/main/java/com/velocitypowered/proxy/protocol/compression/VelocityCompressor.java
+++ b/src/main/java/com/velocitypowered/proxy/protocol/compression/VelocityCompressor.java
@@ -1,13 +1,12 @@
 package com.velocitypowered.proxy.protocol.compression;
 
+import com.velocitypowered.proxy.util.Disposable;
 import io.netty.buffer.ByteBuf;
 
 import java.util.zip.DataFormatException;
 
-public interface VelocityCompressor {
+public interface VelocityCompressor extends Disposable {
     void inflate(ByteBuf source, ByteBuf destination) throws DataFormatException;
 
     void deflate(ByteBuf source, ByteBuf destination) throws DataFormatException;
-
-    void dispose();
 }
diff --git a/src/main/java/com/velocitypowered/proxy/protocol/encryption/VelocityEncryptor.java b/src/main/java/com/velocitypowered/proxy/protocol/encryption/VelocityEncryptor.java
new file mode 100644
index 000000000..e05bc0e40
--- /dev/null
+++ b/src/main/java/com/velocitypowered/proxy/protocol/encryption/VelocityEncryptor.java
@@ -0,0 +1,8 @@
+package com.velocitypowered.proxy.protocol.encryption;
+
+import com.velocitypowered.proxy.util.Disposable;
+import io.netty.buffer.ByteBuf;
+
+public interface VelocityEncryptor extends Disposable {
+    void process(ByteBuf source, ByteBuf destination);
+}
diff --git a/src/main/java/com/velocitypowered/proxy/protocol/packets/EncryptionResponse.java b/src/main/java/com/velocitypowered/proxy/protocol/packets/EncryptionResponse.java
new file mode 100644
index 000000000..a91157c8f
--- /dev/null
+++ b/src/main/java/com/velocitypowered/proxy/protocol/packets/EncryptionResponse.java
@@ -0,0 +1,23 @@
+package com.velocitypowered.proxy.protocol.packets;
+
+import com.velocitypowered.proxy.protocol.MinecraftPacket;
+import com.velocitypowered.proxy.protocol.ProtocolConstants;
+import com.velocitypowered.proxy.protocol.ProtocolUtils;
+import io.netty.buffer.ByteBuf;
+
+public class EncryptionResponse implements MinecraftPacket {
+    private byte[] sharedSecret;
+    private byte[] verifyToken;
+
+    @Override
+    public void decode(ByteBuf buf, ProtocolConstants.Direction direction, int protocolVersion) {
+        this.sharedSecret = ProtocolUtils.readByteArray(buf, 256);
+        this.verifyToken = ProtocolUtils.readByteArray(buf, 4);
+    }
+
+    @Override
+    public void encode(ByteBuf buf, ProtocolConstants.Direction direction, int protocolVersion) {
+        ProtocolUtils.writeByteArray(buf, sharedSecret);
+        ProtocolUtils.writeByteArray(buf, verifyToken);
+    }
+}
diff --git a/src/main/java/com/velocitypowered/proxy/util/Disposable.java b/src/main/java/com/velocitypowered/proxy/util/Disposable.java
new file mode 100644
index 000000000..bca174a6d
--- /dev/null
+++ b/src/main/java/com/velocitypowered/proxy/util/Disposable.java
@@ -0,0 +1,9 @@
+package com.velocitypowered.proxy.util;
+
+/**
+ * This marker interface indicates that this object should be explicitly disposed before the object can no longer be used.
+ * Not disposing these objects will likely leak native resources and eventually lead to resource exhaustion.
+ */
+public interface Disposable {
+    void dispose();
+}
diff --git a/src/main/java/com/velocitypowered/proxy/util/EncryptionUtils.java b/src/main/java/com/velocitypowered/proxy/util/EncryptionUtils.java
new file mode 100644
index 000000000..0746ea4d7
--- /dev/null
+++ b/src/main/java/com/velocitypowered/proxy/util/EncryptionUtils.java
@@ -0,0 +1,9 @@
+package com.velocitypowered.proxy.util;
+
+import java.math.BigInteger;
+
+public enum EncryptionUtils { ;
+    public static String twoComplementsSha1Digest(byte[] digest) {
+        return new BigInteger(digest).toString(16);
+    }
+}
diff --git a/src/test/java/com/velocitypowered/proxy/util/EncryptionUtilsTest.java b/src/test/java/com/velocitypowered/proxy/util/EncryptionUtilsTest.java
new file mode 100644
index 000000000..203f6606e
--- /dev/null
+++ b/src/test/java/com/velocitypowered/proxy/util/EncryptionUtilsTest.java
@@ -0,0 +1,25 @@
+package com.velocitypowered.proxy.util;
+
+import org.junit.Assert;
+import org.junit.Test;
+
+import java.nio.charset.StandardCharsets;
+import java.security.MessageDigest;
+
+public class EncryptionUtilsTest {
+    @Test
+    public void twoComplementsSha1Digest() throws Exception {
+        String notchHash = hexDigest("Notch");
+        Assert.assertEquals("4ed1f46bbe04bc756bcb17c0c7ce3e4632f06a48", notchHash);
+
+        String jebHash = hexDigest("jeb_");
+        Assert.assertEquals("-7c9d5b0044c130109a5d7b5fb5c317c02b4e28c1", jebHash);
+    }
+
+    private String hexDigest(String str) throws Exception {
+        MessageDigest digest = MessageDigest.getInstance("SHA-1");
+        digest.update(str.getBytes(StandardCharsets.UTF_8));
+        byte[] digested = digest.digest();
+        return EncryptionUtils.twoComplementsSha1Digest(digested);
+    }
+}
\ No newline at end of file