Infrared properties and electro-optic effects of nematic liquid crystals are reviewed. Physical origins and characterization techniques of infrared birefringence and rotatory power are described. Advantages and disadvantages of three device configurations--parallel, twisted, and perpendicular alignments--are analyzed. Among them, parallel alignment shows the best potential for long-wavelength applications. Several methods for improving the response times of nematic liquid crystals with emphasis in the infrared region are briefly discussed.