A detailed theoretical and experimental study of laser‐induced density and temperature changes, and flow‐reorientation effects in the nematic and smectic phases of liquid crystals is presented. Using picosecond lasers, the initial nanosecond dynamics of the photoinduced density waves, temperature buildup, and relaxations are temporally resolved. The experimentally observed relaxation phenomena and time scales are in good agreement with the theoretical expressions obtained by analytical solutions of the coupled hydrodynamical equations describing these fundamental mechanisms. Our new measurement and theory provide a quantitative account of the relative contribution from the electrostrictive and thermoelastic contributions that had not been presented in previous studies. Our study of the smectic phase has conclusively established the mechanism for the formation of erasable and permanent grating effects under short‐laser‐pulse excitation as laser‐induced electrostrictive and thermoelastic effects.