A liquid crystal device comprising a first transparent plate (10) having transparent electrode means and an orientation layer, a second transparent plate (12) having transparent electrode means and an orientation layer, a liquid crystal layer (14) inserted between the first and second transparent plates, a first polarizer (32) arranged on the outside of the first transparent plate, and a second polarizer (34) arranged on the outside of the second transparent plate, wherein the liquid crystal layer (14) includes a first liquid crystal (16) existing between the orientation layer of the first transparent plate and the orientation layer of the second transparent plate, and liquid crystal capsules (20) dispersed in the first liquid crystal and including therein a second liquid crystal (18).