Data encryption plays a vital role in online privacy by converting data into a secure format that is unreadable without a decryption key. This process protects sensitive information, such as personal details and financial transactions, from unauthorized access. Encryption ensures that even if data is intercepted during transmission or stored unlawfully, it remains confidential and safe from malicious actors. By implementing encryption protocols, organizations can enhance user trust and comply with regulations regarding data protection, thus safeguarding user privacy in a digital landscape fraught with security threats.