We have demonstrated polymer-encapsulated blue phase (PEBP) liquid crystal droplets in electro-optical films with in-plane electric field switching. The PEBP films are prepared via solvent evaporation-induced phase separation of a mixture of blue phase liquid crystal (BPLC) and polymer latex. The PEBP films, laminated between two indium–tin-oxide coated conductive substrates, enable switching between light-scattering and transparent states in response to electric fields applied across the film. The PEBP films also allow in-plane switching to induce birefringence between crossed polarizers at low switching voltage and with fast response time.