Yes, Its Supported as per this Microsoft Documentation,
With host-based encryption, the data stored on the VM host of your AKS
agent nodes' VMs is encrypted at rest and flows encrypted to the
Storage service. This means the temp disks are encrypted at rest with
platform-managed keys. The cache of OS and data disks is encrypted at
rest with either platform-managed keys or customer-managed keys
depending on the encryption type set on those disks. By default, when
using AKS, OS and data disks are encrypted at rest with
platform-managed keys, meaning that the caches for these disks are
also by default encrypted at rest with platform-managed keys.
For Details on how to do Host-based encryption on Azure Kubernetes Service
, Please follow the Document.
If you want to Bring Your Own Keys, then please refer this Microsoft Document .