GPG4Browsers Merged with OpenPGP.js a Javascript implementation of OpenPGP that can be used to encrypt and decrypt webmail, at the moment it is only available as a Google Chrome extension and it only works with Gmail, using HTML5 for local storage of public and private encryption keys, OpenPGP.js supports all encryption ciphers (AES, Twofish, TripleDES, CAST5, Blowfish) and hashing algorithms (SHA, MD5, RIPEMD160) supported by OpenPGP specifications (except IDEA). It can be used to digitally sign messages using standard public/private RSA, DSA or ElGamal asymmetric cryptography, however it can not create signing keys, you will have to import them. OpenPGP.js is not available in the Chrome Web Store, it needs to be manually installed following the instructions in Recurity Labs website
OpenPGP.js webmail OpenPGP encryption
Its main features are encryption and description of messages, signing and verifying of message signatures, and the importing and exporting of certificates. Unlike GnuPG, it can not compress data, this can be a problem to create messages compatible with GnuPG, the whole idea of using standard OpenPGP encryption is that it does not matter what software people is using to encrypt and decrypt email as long as they use OpenPGP specifications they should be able to communicate. The developers advise that to create a GnuPGP compatible messages you add the option –compress-algo none in settings.
Although lacking features and restricted to Gmail encryption right now, being an open source project open to everyone for improvements this applications has the earmarks of being promising, if someone can manage to port it to other Internet browsers and support other webmail providers it should be quickly adopted, a GPG Javascript tool like this one can be used in portable browsers, and it does not require administrator rights or installing anything in your computer which is a big bonus.
UPDATE 2013: This project is now merged with OpenPGP.js, link updated.