diff --git a/snip/crypto/service.py b/snip/crypto/service.py
new file mode 100644
index 0000000..16dae47
--- /dev/null
+++ b/snip/crypto/service.py
@@ -0,0 +1,61 @@
+"""AES encryption service using Fernet with PBKDF2."""
+
+import base64
+import hashlib
+import os
+import secrets
+
+from cryptography.fernet import Fernet
+from cryptography.hazmat.primitives import hashes
+from cryptography.hazmat.primitives.kdf.pbkdf2 import PBKDF2HMAC
+
+
+class CryptoService:
+    PBKDF2_ITERATIONS = 480000
+    KEY_LENGTH = 32
+    SALT_LENGTH = 16
+
+    def __init__(self, key_file: str | None = None):
+        if key_file is None:
+            key_file = os.environ.get("SNIP_KEY_FILE", "~/.snip/.key")
+        self.key_file = os.path.expanduser(key_file)
+        self._ensure_dir()
+
+    def _ensure_dir(self):
+        os.makedirs(os.path.dirname(self.key_file), exist_ok=True)
+
+    def _get_salt(self) -> bytes:
+        salt_file = f"{self.key_file}.salt"
+        if os.path.exists(salt_file):
+            with open(salt_file, "rb") as f:
+                return f.read()
+        salt = secrets.token_bytes(self.SALT_LENGTH)
+        with open(salt_file, "wb") as f:
+            f.write(salt)
+        return salt
+
+    def _derive_key(self, password: str) -> bytes:
+        salt = self._get_salt()
+        kdf = PBKDF2HMAC(
+            algorithm=hashes.SHA256(),
+            length=self.KEY_LENGTH,
+            salt=salt,
+            iterations=self.PBKDF2_ITERATIONS,
+        )
+        return base64.urlsafe_b64encode(kdf.derive(password.encode()))
+
+    def _get_fernet(self, password: str) -> Fernet:
+        key = self._derive_key(password)
+        return Fernet(key)
+
+    def encrypt(self, plaintext: str, password: str) -> str:
+        """Encrypt plaintext using password-derived key."""
+        f = self._get_fernet(password)
+        encrypted = f.encrypt(plaintext.encode())
+        return base64.urlsafe_b64encode(encrypted).decode()
+
+    def decrypt(self, ciphertext: str, password: str) -> str:
+        """Decrypt ciphertext using password-derived key."""
+        f = self._get_fernet(password)
+        encrypted = base64.urlsafe_b64decode(ciphertext.encode())
+        return f.decrypt(encrypted).decode()