A password manager is a software program to prevent password fatigue by automatically generating, autofilling and storing passwords. It can do this for local applications or web applications such as online shops or social media. Web browsers tend to have a built-in password manager. Password managers typically require a user to create and remember a single password to unlock to access the stored passwords. Password managers can integrate multi-factor authentication and passkey authentication.

The first password manager software designed to securely store passwords was Password Safe created by Bruce Schneier, which was released as a free utility on September 5, 1997. Designed for Microsoft Windows 95, Password Safe used Schneier's Blowfish algorithm to encrypt passwords and other sensitive data. Although Password Safe was released as a free utility, due to export restrictions on cryptography from the United States, only U.S. and Canadian citizens and permanent residents were initially allowed to download it.

As of October 2024^[update], the built-in Google Password Manager in Google Chrome became the most used password manager.

Some applications store passwords as an unencrypted file, leaving the passwords easily accessible to malware or people attempting to steal personal information.

Some password managers require a user-selected master password or passphrase to form the key used to encrypt passwords stored for the application to read. The security of this approach depends on the strength of the chosen password (which may be guessed through malware), and also that the passphrase itself is never stored locally where a malicious program or individual could read it. A compromised master password may render all of the protected passwords vulnerable, meaning that a single point of entry can compromise the confidentiality of sensitive information. This is known as a single point of failure.

While password managers offer robust security for credentials, their effectiveness hinges on the user's device security. If a device is compromised by malware like Raccoon, which excels at stealing data, the password manager's protections can be nullified. Malware like keyloggers can steal the master password used to access the password manager, granting full access to all stored credentials. Clipboard sniffers can capture sensitive information copied from the manager, and some malware might even steal the encrypted password vault file itself. In essence, a compromised device with password-stealing malware can bypass the security measures of the password manager, leaving the stored credentials vulnerable.

As with password authentication techniques, key logging or acoustic cryptanalysis may be used to guess or copy the "master password". Some password managers attempt to use virtual keyboards to reduce this risk - though this is still vulnerable to key loggers that take the keystrokes and send what key was pressed to the person/people trying to access confidential information.

Cloud-based password managers offer a centralized location for storing login credentials. However, this approach raises security concerns. One potential vulnerability is a data breach at the password manager itself. If such an event were to occur, attackers could potentially gain access to a large number of user credentials. A 2022 security incident involving LastPass exemplifies this risk.