A liquid crystal display consists of a layer of liquid crystals sandwiched between two plates of polarized glass. A color filter and a system for controlling the voltage passed to this filter, are positioned on one of the glass plates. LCDs do not produce their own light, so a light source behind the display is also necessary; this is accomplished by using several florescent light bulbs and a "diffuser plate" to help distribute the light evenly. This back light must be powerful, as polarized glass and liquid crystal materials absorb more than half of the light that passes through their layers.

There are two basic color-producing techniques for LCDs: passive matrix and active matrix. The design of a passive matrix is simple and cost-efficient, but a slow response time and imprecise voltage control results in "ghosting" effects and fuzzy images with poor contrast.

A layer of Thin Film Transistors (TFTs) makes up an active matrix; a transistor positioned at each pixel intersection regulates which pixels receive a charge. A beam of light passes through this matrix, which determines whether the pixel should be "on" (LCC activated) or "off" (no light passes through). Light waves that make it through the matrix are then passed through the color filter, which allows only the desired color to be displayed. By controlling the voltage to each pixel, each color can display more than 256 shades to create a palette of nearly 16.8 million colors! This wide selection allows the display to match colors accurately and create a more realistic picture. Many of the LCD TVs sold at Circuit City feature active matrix displays.

TFTs can produce a wide array of colors, but it takes an enormous number of transistors to make up a display, and a problem with any one of them creates a defective pixel on the screen. Typically this shows up as a bright spot on a dark background, caused by a damaged TFT failing to turn off a pixel. Most active matrix displays contain a few bad pixels, but a few bad pixels are not going to have much of an impact on the overall picture.

The properties of liquid crystal material can create problems with viewing angle effects, causing the image to darken, disappear, or reverse the dark and light tones when the viewer is not directly in front of the display (kind of like looking at the negative of a photo). The light bulbs make LCDs heavier than the plasma TVs (though they are still lightweights compared to CRT televisions.

Benefits of LCD TVs include a picture that can't burn in and doesn't deteriorate over time. Because of their flat-panel nature, placement options are plentiful, optimizing the cool factor over standard TVs.