Recent advancements in extended reality (XR) showcase their potential ability to enhance the user experience of traditional displays such as liquid crystal displays and organic light‐emitting diode screens. To achieve this goal, the upcoming generation of head‐mounted displays (HMDs) necessitates a seamless transition between different XR modes, including augmented reality (AR) and virtual reality (VR) modes. Herein, an innovative cholesteric liquid crystal‐ (CLC‐) based optical combiner for HMDs is introduced. This approach enables the display device to switch between AR, VR, and transparent modes via temperature modulation. Since CLC materials demonstrate varying optical properties at different temperatures, a real‐time temperature monitoring system that is paired with an external controller is integrated. This allows for dynamic temperature adjustments of the optical combiner and enables smooth transitions between display modes. Furthermore, the Berreman 4 × 4 matrix method is used to simulate the optical properties of the optical combiner, finding strong agreement with the experimental results. The performance of the tunable optical combiners using 450, 532, and 635 nm laser sources is explored. The findings demonstrate that CLC‐based optical combiners can effectively switch between the three distinct modes at corresponding temperatures, paving the way for versatile applications in future HMDs.