Dye doped liquid crystals are interesting materials which present a colossal optical nonlinearity (n2 = 103cm2=W). This dissertation is focused on the effects that contribute to the reorientation of the liquid crystal molecules induced by the dye photoanchoring to the substrate, and which are responsible for the formation of permanent gratings. It was found that small changes in the substrate due to the dye anchoring, leads to large changes in the bulk liquid crystal reorientation. In addition, the outstanding characteristics of this material, which include low power illumination requirements, amongothers, are exploited in phase contrast microscopy. An inversion in the image contrast of aknown phase object has been observed by changing the polarization from extraordinary to ordinary. Sofar, the minimum phase change resolvableis λ=8 at 633nm. This method can be implemented in realtime, and the contrast can be tuned by adjusting the intensity and polarization of the illumination beam, temperature and electricelds.