By degree of molecular arrangement, liquid crystals take an intermediate position between solid crystals (which have three-dimensional long-range order of particle arrangement, with liquids having only short-range order). Liquid crystals that are formed by temperature change ("partial melting" of the solid phase) are called thermotropic liquid crystals. Lyotropic liquid crystals are formed due to changes in the concentration of surfactants in a solvent.

The liquid-crystalline state is often called mesomorphic (mezos meaning "intermediate"), and the substance itself is called mesophase. The liquid-crystalline state is most commonly observed in organic compounds whose molecules have an elongated or disc shape. The formation of liquid crystals is due to the considerably anisotropic shape of the molecules (chain or flat), which determines the relative parallelism of their arrangement.

The unique combination of properties inherent in both liquids and crystals is caused by the specifics of the internal molecular structure of liquid crystals. In accordance with the classification proposed by Friedel (France) there are three main types of thermotropic liquid crystals based on the arrangement of molecules: smectic, nematic and cholesteric, to which the discotic phase has recently been added.

Smectic (from Greek smegma meaning "soap, ointment") liquid crystals can be formed by substances whose molecules have an elongated rod-like shape and are oriented parallel to each other to form a thin layer. Inside the layers in the lateral direction there is no strict periodicity in the arrangement of molecules. For example, rainbow bubbles are smectic liquid crystals. The smectic layer has the important property of a solid crystal, anisotropy of optical properties, as along the long axis of the molecules, the light propagates at a slower rate than across it, and the refractive indices in a liquid crystal are different in these directions.

The second type of thermotropic liquid crystals is called nematic (from Greek nema meaning "thread"). These substances contain filamentous particles, which are either deposited on the reservoir wall or remain free. These filaments look "brushed" and are parallel to each other but can slide up and down. Nematic liquid crystals are not so ordered as smectic. Nevertheless, they are also optically anisotropic, and under a microscope give a "moire" texture with alternating light and dark stripes. Particles of a nematic liquid crystal react to electric and magnetic fields the same way as iron filings, by arranging in an orderly manner along the field lines.

Cholesteric liquid crystals are mainly derivatives of cholesterol. Here flat and long molecules are arranged into layers the same way as in smectic liquid crystals, but within each layer the arrangement of the particles resembles nematic liquid crystals. It is interesting that neighbouring finest molecular layers in such cholesteric liquid crystals are rotated slightly with respect to each other, and thus a stack of such layers forms a spiral. Due to their peculiar structure these liquid crystals have specific optical properties. Ordinary light passing through such a substance is divided into two beams that are refracted differently. When a colourless, like water, cholesteric liquid crystal gets into a zone of varying temperature, it gets a bright colour.

Discotic liquid crystals, discovered by Chandrasekhar (USA) and others, are systems of liquid columns forming a two-dimensional lattice.

Lyotropic liquid crystals are composed of two or more components. Usually one of the components is water and another an amphiphile containing a polar head group that is attached to one or more long chains of hydrocarbons. A widely known example of such system is the water solution of soap (sodium dodecyl sulphate).

With an increase in the concentration of water, several different mesophases can emerge. In the lamellar phase the water fills the space between the polar groups of neighbouring layers, and hydrocarbon radicals, having no ordered orientation, are located in a non-polar environment. In the cubic or viscous isotropic phase the flat layers bend and form spherical structural units, and the polar functional groups of molecules are located on the surface of the spheres, while the hydrocarbon chains are inside of it. The packaging of spheres results in a spatial body-centred cubic lattice, where the water fills the space between the spheres. In the hexagonal or middle phase, the layers are rolled up into cylinders. The cylindrical units of indefinite length are arranged parallel to one another in a hexagonal array. A nematic type of ordering has also been observed in some systems. In hydrophobe-dominated compositions inverted phases can occur in which the hydrocarbon tails point out towards the hydrophobic medium while water is trapped inside the nucleus. Liquid crystals are used in the displays of watches, calculators and personal computers, and are a promising material for optical computers. Liquid crystals were discovered by German physicist Otto Lehmann and Austrian botanist Friedrich Reinitzer.