The ability of certain substances to refract differently light waves whose vibrations are in two directions (see double refraction) when the substance is placed in an electric field. The effect, discovered in 1875 by John Kerr (1824–1907), is caused by the fact that certain molecules have electric dipoles, which tend to be orientated by the applied field; the normal random motions of the molecules tends to destroy this orientation and the balance is struck by the relative magnitudes of the field strength, the temperature, and the magnitudes of the dipole moments.

The Kerr effect is observed in a Kerr cell, which consists of a glass cell containing the liquid or gaseous substance; two capacitor plates are inserted into the cell and light is passed through it at right angles to the electric field. There are two principal indexes of refraction: n_o (the ordinary index) and n_e (the extraordinary index). The difference in the velocity of propagation in the cell causes a phase difference, δ‎, between the two waves formed from a beam of monochromatic light, wavelength λ‎, such that

where x is the length of the light path in the cell. Kerr also showed empirically that the ratio

where E is the field strength and B is a constant, called the Kerr constant, which is characteristic of the substance and approximately inversely proportional to the thermodynamic temperature.

The Kerr shutter consists of a Kerr cell filled with a liquid, such as nitrobenzene, placed between two crossed polarizers; the electric field is arranged to be perpendicular to the axis of the light beam and at 45° to the axis of the polarizers. In the absence of a field there is no optical path through the device. When the field is switched on the nitrobenzene becomes doubly refracting and a path opens between the crossed polarizers.