Optical second-harmonic generation (SHG) from mixed liquid crystal-stearic acid molecular monolayers, as a function of liquid crystal concentration, is reported. It is shown that, in concentrated monolayers, a substantial local-field effect exists which can be described, to a first approximation, by a point dipole model. The apparent molecular hyperpolarizability in pure monolayers of these liquid crystals is reduced by a factor of between six and eight, due to this local field. This is an important consideration in the design of materials for ultra-thin-film nonlinear optical devices. Hyperpolarizability measurements should be made using monolayer films where the active species is diluted by about a factor of ten by a species with negligible polarizability, such as a fatty acid, having first taken care to establish that the active species disperses uniformly. In this way the experimental hyperpolarizability may be directly compared to theoretical values from calculations of isolated molecular clusters. These LB monolayers are ideal model systems for testing theoretical approaches to the local-field problem, and progress in this area is important in understanding the optical response of surfaces and interfaces in general, and those of semiconductors in particular.