Liquid crystals (liquid crystal) are materials with a structure that is intermediate between that of liquids and crystalline solids. As in liquids, the molecules of a liquid crystal can flow past one another. As in solid crystals, however, they arrange themselves in recognizably ordered patterns. In common with solid crystals, liquid crystals can exhibit polymorphism; i.e., they can take on different structural patterns, each with unique properties. LCDs utilize either nematic or smectic liquid crystals. The molecules of nematic liquid crystals align themselves with their axes in parallel, as shown in the figure-->. Smectic liquid crystals, on the other hand, arrange themselves in layered sheets; within different smectic phases the molecules may take on different alignments relative to the plane of the sheets. (For further details on the physics of liquid crystalline matter, see the article liquid crystal.)

A TN cell, as shown in the figure-->, consists of upper and lower substrate plates separated by a narrow gap (typically 5–10 micrometres; 1 micrometre = 10⁻⁶ metre) filled with a layer of liquid crystal. The substrate plates are normally transparent glass and carry patterned electrically conducting transparent coatings of indium tin oxide. The electrode layers are coated with a thin aligning layer of a polymer that causes the liquid crystal molecules in contact with them to align approximately parallel to the surface. In most currently manufactured displays, the alignment layers consist of a layer of polymer a few tens of nanometres thick (1 nanometre = 10⁻⁹ metre) that has been rubbed with a cloth in only one direction. In assembling the cell, the top and bottom substrate plates are arranged so that the alignment directions are perpendicular to each other. The whole assembly is then contained between a pair of sheet polarizers, which also have their light-absorption axes perpendicular to each other. In the absence of any voltage, the perpendicular alignment layers cause the liquid crystal to adopt a twisted configuration from one plate to the other. With no liquid crystal present, light passing in either direction through the cell would be absorbed because of the crossed polarizers, and the cell would appear to be dark. In the presence of a liquid crystal layer, however, the cell appears to be transparent because the optics of the twisted liquid crystal match the crossed arrangement of the polarizers. Application of three to five volts across the liquid crystal destroys the twisted state and causes the molecules to orient perpendicular to the substrate plates, giving a dark appearance to the cell. For simple displays, the liquid crystal cell is operated in a reflective mode, with a diffuse reflector placed behind the display, and the activated parts of the electrode pattern appear as black images on a gray background provided by the diffuse reflector. By patterning the electrodes in segments or as an array of small squares, it is possible to display alphanumeric characters and very low-resolution images—for example, in digital watches or calculators.

The display of complex images requires high-resolution dot-matrix displays consisting of many thousands of pixels. For example, the video graphics array (VGA) standard for computer monitors consists of an array of 640 by 480 picture elements, which for a colour LCD translates to 921,600 individual pixels. Excellent images can be built up from arrays of this complexity by using thin-film transistor (TFT) TN displays, in which each pixel has associated with it a silicon transistor that acts as an individual electronic switch. (A cutaway portion of a TFT display is illustrated in the figure-->.) The use of a transistor for each pixel makes the TFT an active-matrix display, as opposed to the passive-matrix display described in the previous section. The TN effect produces black-and-white images, but colour images can be generated by forming three-pixel groups using red, blue, and green filters. The displayed image is bright by virtue of a flat backlight placed behind the liquid crystal panel.

The increasing demand for video displays has placed a growing emphasis on the switching speed of liquid crystals. This has led to the development of devices employing smectic liquid crystals, certain of which have a faster electro-optical response than nematic liquid crystals. The surface-stabilized ferroelectric (ferroelectricity) liquid crystal (SSFLC) display is currently the most developed smectic device. In it the liquid crystal molecules are arranged in layers perpendicular to the substrate planes, which are separated by one or two micrometres, and within the layers the molecules are tilted, as illustrated in the figure-->. The host liquid crystal contains optically active molecules, and a subtle consequence of the optical activity and the tilt of the molecules is the appearance of a permanent charge separation, or ferroelectric dipole, analogous to the ferromagnetic (ferromagnetism) dipole of a magnet. The direction of this dipole is perpendicular to the tilt direction of the molecules and in the plane of the layers. Thus, there is a permanent charge separation across the liquid crystal layer in the SSFLC, and its sign is directly coupled to the tilt direction of the molecules. An applied voltage of the correct sign can reverse the direction of this dipole in tens of microseconds and hence reverse the tilt direction of the molecules. The corresponding change in optical properties can cause a change from light to dark when one or more polarizers are used.

Two reasonably accessible textbooks for undergraduates are Pochi Yeh and Claire Gu, Optics of Liquid Crystal Displays (1999); and Birenda Bahadur (ed.), Liquid Crystals: Applications and Uses (1990).