AbstractA novel directional backlight system for transmissive LCD illumination is described for the first time. By controlling the angular light distribution from the display, very low power consumption can be achieved for a required display luminance, or the backlight can operate with a conventional luminance distribution. Additionally very high display luminance can be achieved at the same power consumption levels as conventional backlight designs. Such a display can achieve good readability in high illuminance conditions, for example in direct sunlight. The backlight optical stack comprises a stepped waveguide Directional Light Guide Plate (D‐LGP), a micro‐structured reflective film and a polarisation recirculation structure that cooperates with an LED array to direct viewing windows to an observer with high coupling efficiency. The system implementation is described and measured performance from demonstrator displays is presented.