In this paper, we review recent progress of research on the photorefractive effect of ferroelectric liquid crystals. The photorefractive effect is a phenomenon that forms a dynamic hologram in a material. The interference of two laser beams in a photorefractive material establishes a refractive index grating. This phenomenon is applicable to a wide range of devices related to diffraction optics including 3D displays, optical amplification, optical tomography, novelty filters, and phase conjugate wave generators. Ferroelectric liquid crystals are considered as a candidate for practical photorefractive materials. A refractive index grating formation time of 8–10 ms and a large gain coefficient are easily obtained in photorefractive ferroelectric liquid crystals.