You can set up to two passwords on a document: one required to open the document and another required to modify. Only users knowing the appropriate password will be able to open and/or modify the document.

  1. Choose File → Save As, then click the Tools button and choose Security Options.

    or

    Choose Tools ? Options and click the Security tab.

    Options dialog box - Security tab

  2. Set a Password to open and/or a Password to modify.
Be sure to remember the password. It is possible to lock yourself out of your own document.

You can click the Advanced button and choose to encrypt the document. Encryption scrambles the contents of the document using the password as a key. Without the password, it is not possible to examine the contents of the file, even with very sophisticated tools. If you use any of the advanced encryption tools, only users with Word 2002 or Word 2003 will be able to open the document at all, even if they know the password.