A new electro‐optic effect is presented, based on guest‐host interactions in nematic liquid crystals. The ability of a nematic liquid crystal to cooperatively align in an electric field is used to orient ``guest'' dichroic dye molecules (molecules whose absorption spectrum is a function of the molecular orientation with respect to the polarization of the incident light). Thus one can electrically switch the color of transmitted light using fields of the order of 104V/cm.