diff --git a/staging/src/k8s.io/apiserver/pkg/storage/value/encrypt/envelope/BUILD b/staging/src/k8s.io/apiserver/pkg/storage/value/encrypt/envelope/BUILD
new file mode 100644
index 00000000000..1cc1da54175
--- /dev/null
+++ b/staging/src/k8s.io/apiserver/pkg/storage/value/encrypt/envelope/BUILD
@@ -0,0 +1,30 @@
+package(default_visibility = ["//visibility:public"])
+
+licenses(["notice"])
+
+load(
+    "@io_bazel_rules_go//go:def.bzl",
+    "go_library",
+    "go_test",
+)
+
+go_library(
+    name = "go_default_library",
+    srcs = ["envelope.go"],
+    tags = ["automanaged"],
+    deps = [
+        "//vendor/github.com/hashicorp/golang-lru:go_default_library",
+        "//vendor/k8s.io/apiserver/pkg/storage/value:go_default_library",
+    ],
+)
+
+go_test(
+    name = "go_default_test",
+    srcs = ["envelope_test.go"],
+    library = ":go_default_library",
+    tags = ["automanaged"],
+    deps = [
+        "//vendor/k8s.io/apiserver/pkg/storage/value:go_default_library",
+        "//vendor/k8s.io/apiserver/pkg/storage/value/encrypt/aes:go_default_library",
+    ],
+)
diff --git a/staging/src/k8s.io/apiserver/pkg/storage/value/encrypt/envelope/envelope.go b/staging/src/k8s.io/apiserver/pkg/storage/value/encrypt/envelope/envelope.go
new file mode 100644
index 00000000000..acb26e6f5ed
--- /dev/null
+++ b/staging/src/k8s.io/apiserver/pkg/storage/value/encrypt/envelope/envelope.go
@@ -0,0 +1,162 @@
+/*
+Copyright 2017 The Kubernetes Authors.
+
+Licensed under the Apache License, Version 2.0 (the "License");
+you may not use this file except in compliance with the License.
+You may obtain a copy of the License at
+
+    http://www.apache.org/licenses/LICENSE-2.0
+
+Unless required by applicable law or agreed to in writing, software
+distributed under the License is distributed on an "AS IS" BASIS,
+WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+See the License for the specific language governing permissions and
+limitations under the License.
+*/
+
+// Package envelope transforms values for storage at rest using a Envelope provider
+package envelope
+
+import (
+	"crypto/aes"
+	"crypto/cipher"
+	"crypto/rand"
+	"encoding/binary"
+	"fmt"
+
+	"k8s.io/apiserver/pkg/storage/value"
+
+	lru "github.com/hashicorp/golang-lru"
+)
+
+// defaultCacheSize is the number of decrypted DEKs which would be cached by the transformer.
+const defaultCacheSize = 1000
+
+// Service allows encrypting and decrypting data using an external Key Management Service.
+type Service interface {
+	// Decrypt a given data string to obtain the original byte data.
+	Decrypt(data string) ([]byte, error)
+	// Encrypt bytes to a string ciphertext.
+	Encrypt(data []byte) (string, error)
+}
+
+type envelopeTransformer struct {
+	envelopeService Service
+
+	// transformers is a thread-safe LRU cache which caches decrypted DEKs indexed by their encrypted form.
+	transformers *lru.Cache
+
+	// cacheSize is the maximum number of DEKs that are cached.
+	cacheSize int
+
+	// baseTransformerFunc creates a new transformer for encrypting the data with the DEK.
+	baseTransformerFunc func(cipher.Block) value.Transformer
+}
+
+// NewEnvelopeTransformer returns a transformer which implements a KEK-DEK based envelope encryption scheme.
+// It uses envelopeService to encrypt and decrypt DEKs. Respective DEKs (in encrypted form) are prepended to
+// the data items they encrypt. A cache (of size cacheSize) is maintained to store the most recently
+// used decrypted DEKs in memory.
+func NewEnvelopeTransformer(envelopeService Service, cacheSize int, baseTransformerFunc func(cipher.Block) value.Transformer) (value.Transformer, error) {
+	if cacheSize == 0 {
+		cacheSize = defaultCacheSize
+	}
+	cache, err := lru.New(cacheSize)
+	if err != nil {
+		return nil, err
+	}
+	return &envelopeTransformer{
+		envelopeService:     envelopeService,
+		transformers:        cache,
+		cacheSize:           cacheSize,
+		baseTransformerFunc: baseTransformerFunc,
+	}, nil
+}
+
+// TransformFromStorage decrypts data encrypted by this transformer using envelope encryption.
+func (t *envelopeTransformer) TransformFromStorage(data []byte, context value.Context) ([]byte, bool, error) {
+	// Read the 16 bit length-of-DEK encoded at the start of the encrypted DEK. 16 bits can
+	// represent a maximum key length of 65536 bytes. We are using a 256 bit key, whose
+	// length cannot fit in 8 bits (1 byte). Thus, we use 16 bits (2 bytes) to store the length.
+	keyLen := int(binary.BigEndian.Uint16(data[:2]))
+	if keyLen+2 > len(data) {
+		return nil, false, fmt.Errorf("invalid data encountered by genvelope transformer, length longer than available bytes: %q", data)
+	}
+	encKey := string(data[2 : keyLen+2])
+	encData := data[2+keyLen:]
+
+	var transformer value.Transformer
+	// Look up the decrypted DEK from cache or Envelope.
+	_transformer, found := t.transformers.Get(encKey)
+	if found {
+		transformer = _transformer.(value.Transformer)
+	} else {
+		key, err := t.envelopeService.Decrypt(encKey)
+		if err != nil {
+			return nil, false, fmt.Errorf("error while decrypting key: %q", err)
+		}
+		transformer, err = t.addTransformer(encKey, key)
+		if err != nil {
+			return nil, false, err
+		}
+	}
+	return transformer.TransformFromStorage(encData, context)
+}
+
+// TransformToStorage encrypts data to be written to disk using envelope encryption.
+func (t *envelopeTransformer) TransformToStorage(data []byte, context value.Context) ([]byte, error) {
+	newKey, err := generateKey(32)
+	if err != nil {
+		return nil, err
+	}
+
+	encKey, err := t.envelopeService.Encrypt(newKey)
+	if err != nil {
+		return nil, err
+	}
+
+	transformer, err := t.addTransformer(encKey, newKey)
+	if err != nil {
+		return nil, err
+	}
+
+	// Append the length of the encrypted DEK as the first 2 bytes.
+	encKeyLen := make([]byte, 2)
+	encKeyBytes := []byte(encKey)
+	binary.BigEndian.PutUint16(encKeyLen, uint16(len(encKeyBytes)))
+
+	prefix := append(encKeyLen, encKeyBytes...)
+
+	prefixedData := make([]byte, len(prefix), len(data)+len(prefix))
+	copy(prefixedData, prefix)
+	result, err := transformer.TransformToStorage(data, context)
+	if err != nil {
+		return nil, err
+	}
+	prefixedData = append(prefixedData, result...)
+	return prefixedData, nil
+}
+
+var _ value.Transformer = &envelopeTransformer{}
+
+// addTransformer inserts a new transformer to the Envelope cache of DEKs for future reads.
+func (t *envelopeTransformer) addTransformer(encKey string, key []byte) (value.Transformer, error) {
+	block, err := aes.NewCipher(key)
+	if err != nil {
+		return nil, err
+	}
+	transformer := t.baseTransformerFunc(block)
+	t.transformers.Add(encKey, transformer)
+	return transformer, nil
+}
+
+// generateKey generates a random key using system randomness.
+func generateKey(length int) ([]byte, error) {
+	key := make([]byte, length)
+	_, err := rand.Read(key)
+	if err != nil {
+		return nil, err
+	}
+
+	return key, nil
+}
diff --git a/staging/src/k8s.io/apiserver/pkg/storage/value/encrypt/envelope/envelope_test.go b/staging/src/k8s.io/apiserver/pkg/storage/value/encrypt/envelope/envelope_test.go
new file mode 100644
index 00000000000..0ba68afc63d
--- /dev/null
+++ b/staging/src/k8s.io/apiserver/pkg/storage/value/encrypt/envelope/envelope_test.go
@@ -0,0 +1,203 @@
+/*
+Copyright 2017 The Kubernetes Authors.
+
+Licensed under the Apache License, Version 2.0 (the "License");
+you may not use this file except in compliance with the License.
+You may obtain a copy of the License at
+
+    http://www.apache.org/licenses/LICENSE-2.0
+
+Unless required by applicable law or agreed to in writing, software
+distributed under the License is distributed on an "AS IS" BASIS,
+WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+See the License for the specific language governing permissions and
+limitations under the License.
+*/
+
+package envelope
+
+import (
+	"bytes"
+	"crypto/aes"
+	"encoding/base64"
+	"fmt"
+	"strconv"
+	"strings"
+	"testing"
+
+	"k8s.io/apiserver/pkg/storage/value"
+	aestransformer "k8s.io/apiserver/pkg/storage/value/encrypt/aes"
+)
+
+const (
+	testText              = "abcdefghijklmnopqrstuvwxyz"
+	testContextText       = "0123456789"
+	testEnvelopeCacheSize = 10
+)
+
+// testEnvelopeService is a mock Envelope service which can be used to simulate remote Envelope services
+// for testing of Envelope based encryption providers.
+type testEnvelopeService struct {
+	disabled   bool
+	keyVersion string
+}
+
+func (t *testEnvelopeService) Decrypt(data string) ([]byte, error) {
+	if t.disabled {
+		return nil, fmt.Errorf("Envelope service was disabled")
+	}
+	dataChunks := strings.SplitN(data, ":", 2)
+	if len(dataChunks) != 2 {
+		return nil, fmt.Errorf("invalid data encountered for decryption: %s. Missing key version", data)
+	}
+	return base64.StdEncoding.DecodeString(dataChunks[1])
+}
+
+func (t *testEnvelopeService) Encrypt(data []byte) (string, error) {
+	if t.disabled {
+		return "", fmt.Errorf("Envelope service was disabled")
+	}
+	return t.keyVersion + ":" + base64.StdEncoding.EncodeToString(data), nil
+}
+
+func (t *testEnvelopeService) SetDisabledStatus(status bool) {
+	t.disabled = status
+}
+
+func (t *testEnvelopeService) Rotate() {
+	i, _ := strconv.Atoi(t.keyVersion)
+	t.keyVersion = strconv.FormatInt(int64(i+1), 10)
+}
+
+func newTestEnvelopeService() *testEnvelopeService {
+	return &testEnvelopeService{
+		keyVersion: "1",
+	}
+}
+
+// Throw error if Envelope transformer tries to contact Envelope without hitting cache.
+func TestEnvelopeCaching(t *testing.T) {
+	envelopeService := newTestEnvelopeService()
+	envelopeTransformer, err := NewEnvelopeTransformer(envelopeService, testEnvelopeCacheSize, aestransformer.NewCBCTransformer)
+	if err != nil {
+		t.Fatalf("failed to initialize envelope transformer: %v", err)
+	}
+	context := value.DefaultContext([]byte(testContextText))
+	originalText := []byte(testText)
+
+	transformedData, err := envelopeTransformer.TransformToStorage(originalText, context)
+	if err != nil {
+		t.Fatalf("envelopeTransformer: error while transforming data to storage: %s", err)
+	}
+	untransformedData, _, err := envelopeTransformer.TransformFromStorage(transformedData, context)
+	if err != nil {
+		t.Fatalf("could not decrypt Envelope transformer's encrypted data even once: %v", err)
+	}
+	if bytes.Compare(untransformedData, originalText) != 0 {
+		t.Fatalf("envelopeTransformer transformed data incorrectly. Expected: %v, got %v", originalText, untransformedData)
+	}
+
+	envelopeService.SetDisabledStatus(true)
+	// Subsequent read for the same data should work fine due to caching.
+	untransformedData, _, err = envelopeTransformer.TransformFromStorage(transformedData, context)
+	if err != nil {
+		t.Fatalf("could not decrypt Envelope transformer's encrypted data using just cache: %v", err)
+	}
+	if bytes.Compare(untransformedData, originalText) != 0 {
+		t.Fatalf("envelopeTransformer transformed data incorrectly using cache. Expected: %v, got %v", originalText, untransformedData)
+	}
+}
+
+// Makes Envelope transformer hit cache limit, throws error if it misbehaves.
+func TestEnvelopeCacheLimit(t *testing.T) {
+	envelopeTransformer, err := NewEnvelopeTransformer(newTestEnvelopeService(), testEnvelopeCacheSize, aestransformer.NewCBCTransformer)
+	if err != nil {
+		t.Fatalf("failed to initialize envelope transformer: %v", err)
+	}
+	context := value.DefaultContext([]byte(testContextText))
+
+	transformedOutputs := map[int][]byte{}
+
+	// Overwrite lots of entries in the map
+	for i := 0; i < 2*testEnvelopeCacheSize; i++ {
+		numberText := []byte(strconv.Itoa(i))
+
+		res, err := envelopeTransformer.TransformToStorage(numberText, context)
+		transformedOutputs[i] = res
+		if err != nil {
+			t.Fatalf("envelopeTransformer: error while transforming data (%v) to storage: %s", numberText, err)
+		}
+	}
+
+	// Try reading all the data now, ensuring cache misses don't cause a concern.
+	for i := 0; i < 2*testEnvelopeCacheSize; i++ {
+		numberText := []byte(strconv.Itoa(i))
+
+		output, _, err := envelopeTransformer.TransformFromStorage(transformedOutputs[i], context)
+		if err != nil {
+			t.Fatalf("envelopeTransformer: error while transforming data (%v) from storage: %s", transformedOutputs[i], err)
+		}
+
+		if bytes.Compare(numberText, output) != 0 {
+			t.Fatalf("envelopeTransformer transformed data incorrectly using cache. Expected: %v, got %v", numberText, output)
+		}
+	}
+}
+
+func BenchmarkEnvelopeCBCRead(b *testing.B) {
+	envelopeTransformer, err := NewEnvelopeTransformer(newTestEnvelopeService(), testEnvelopeCacheSize, aestransformer.NewCBCTransformer)
+	if err != nil {
+		b.Fatalf("failed to initialize envelope transformer: %v", err)
+	}
+	benchmarkRead(b, envelopeTransformer, 1024)
+}
+
+func BenchmarkAESCBCRead(b *testing.B) {
+	block, err := aes.NewCipher(bytes.Repeat([]byte("a"), 32))
+	if err != nil {
+		b.Fatal(err)
+	}
+
+	aesCBCTransformer := aestransformer.NewCBCTransformer(block)
+	benchmarkRead(b, aesCBCTransformer, 1024)
+}
+
+func BenchmarkEnvelopeGCMRead(b *testing.B) {
+	envelopeTransformer, err := NewEnvelopeTransformer(newTestEnvelopeService(), testEnvelopeCacheSize, aestransformer.NewGCMTransformer)
+	if err != nil {
+		b.Fatalf("failed to initialize envelope transformer: %v", err)
+	}
+	benchmarkRead(b, envelopeTransformer, 1024)
+}
+
+func BenchmarkAESGCMRead(b *testing.B) {
+	block, err := aes.NewCipher(bytes.Repeat([]byte("a"), 32))
+	if err != nil {
+		b.Fatal(err)
+	}
+
+	aesGCMTransformer := aestransformer.NewGCMTransformer(block)
+	benchmarkRead(b, aesGCMTransformer, 1024)
+}
+
+func benchmarkRead(b *testing.B, transformer value.Transformer, valueLength int) {
+	context := value.DefaultContext([]byte(testContextText))
+	v := bytes.Repeat([]byte("0123456789abcdef"), valueLength/16)
+
+	out, err := transformer.TransformToStorage(v, context)
+	if err != nil {
+		b.Fatal(err)
+	}
+
+	b.ResetTimer()
+	for i := 0; i < b.N; i++ {
+		from, stale, err := transformer.TransformFromStorage(out, context)
+		if err != nil {
+			b.Fatal(err)
+		}
+		if stale {
+			b.Fatalf("unexpected data: %t %q", stale, from)
+		}
+	}
+	b.StopTimer()
+}