GRANT ... IDENTIFIED BY 'mypass' [WITH GRANT OPTION];

If you do not want to send the password in clear text and you know the hashed value that PASSWORD() would return for the password, you can specify the hashed value preceded by the keyword PASSWORD:

GRANT ... IDENTIFIED BY PASSWORD '*6C8989366...' [WITH GRANT OPTION];

"If you create a new user but do not specify an IDENTIFIED BY clause, the user has no password. This is very insecure. However, you can enable the NO_AUTO_CREATE_USER SQL mode to prevent GRANT from creating a new user if it would otherwise do so, unless IDENTIFIED BY is given to provide the new user a non-empty password."

SET sql_mode="STRICT_TRANS_TABLES,NO_AUTO_CREATE_USER";

MySQL AB :: MySQL 5.1 Reference Manual :: 12.5.1.3 GRANT Syntax