diff --git a/README.md b/README.md
index 5fa1dbf7f..660002b09 100644
--- a/README.md
+++ b/README.md
@@ -126,6 +126,12 @@ modprobe darling-mach
 chmod a+rw /dev/mach
 ````
 
+### Prefixes
+
+Darling has support for DPREFIXes, which are very similar to WINEPREFIXes. They are virtual “chroot” environments with an macOS-like filesystem structure, where you can install software safely. The default DPREFIX location is `~/.darling`, but this can be changed by exporting an identically named environment variable. A prefix is automatically created and initialized on first use.
+
+Please note that we use `overlayfs` for creating prefixes, and so we cannot support putting prefix on a filesystem like NFS or eCryptfs. In particular, the default prefix location won't work if you have an encrypted home directory.
+
 ### Hello world
 
 Let's start with a Hello world: