The ability to control light direction with tailored precision via facile means is long‐desired in science and industry. With the advances in optics, a periodic structure called diffraction grating gains prominence and renders a more flexible control over light propagation when compared to prisms. Today, diffraction gratings are common components in wavelength division multiplexing devices, monochromators, lasers, spectrometers, media storage, beam steering, and many other applications. Next‐generation optical devices, however, demand nonmechanical, full and remote control, besides generating higher than 1D diffraction patterns with as few optical elements as possible. Liquid crystals (LCs) are great candidates for light control since they can form various patterns under different stimuli, including periodic structures capable of behaving as diffraction gratings. The characteristics of such gratings depend on several physical properties of the LCs such as film thickness, periodicity, and molecular orientation, all resulting from the internal constraints of the sample, and all of these are easily controllable. In this review, the authors summarize the research and development on stimuli‐controllable diffraction gratings and beam steering using LCs as the active optical materials. Dynamic gratings fabricated by applying external field forces or surface treatments and made of chiral and nonchiral LCs with and without polymer networks are described. LC gratings capable of switching under external stimuli such as light, electric and magnetic fields, heat, and chemical composition are discussed. The focus is on the materials, designs, applications, and future prospects of diffraction gratings using LC materials as active layers. Control of light is of fundamental importance across all fields of science and technology. Next‐generation devices require nonmechanical capabilities and easy tuning for adapting to fastchanging situations. How, over the last 50 years, liquid crystals have been used as switchable diffraction gratings, along with fabrication, designs, challenges, and the future of liquid crystal gratings are discussed.