A 3-electrode LC beam deflector, consisting of a glass substrate with two transparent lateral electrodes and a third transparent grounded electrode, placed at the opposite glass substrate was designed and fabricated. A differential voltage, corresponding to the required phase step change, was applied to the lateral electrodes of this beam deflector. The gap between the glass substrates was filled with a nematic liquid crystal mixture. It was shown, that the large refractive index gradient generated by the field between the two lateral electrodes, resulted in the deflection of the incident optical beam with deflection angles as large as 25o, at a high deflection efficiency of approximately 98%. A theoretical analysis based on both ray tracing and far-field diffraction calculations in such a 3-electrode LC cell configuration, confirmed the above experimental results. The advantages of this type of LC deflector are the large deflection angle attainable as well as the continuous deflection operation. The main drawbacks are the difficulties in focusing the beam into the narrow region of the refractive index gradient at the electrode gap, as well as the significant divergence of the deflected optical beam.