Suspensions of rod-like cellulose crystallites of axial ratio ≈ 20–40, prepared by acid hydrolysis of natural cellulose fibres with sulphuric acid, give stable ordered fluids that display well-formed textures and disclinations characteristic of chiral nematic liquid crystalline phases. The critical volume fraction for phase separation of salt-free suspensions is typically 0.03, with a relatively narrow biphasic region. Because of the negative diamagnetic susceptibility of cellulose, the ordered phase becomes oriented in a magnetic field with its chiral nematic axis parallel to the applied field.