A hybrid liquid crystal and carbon nanotube-based device which shows the capacity to perform as a switchable diffraction grating is demonstrated. A liquid crystal layer was sandwiched between two electrodes (patterned into gratings). The bottom electrode consists of a two dimensional square array of carbon nanotubes, while the top electrode comprises an ITO-based in-plane switching electrode on glass. The carbon nanotubes, due to their high aspect ratios, produce defects within the liquid crystal layer, producing a two dimensional grating. The device displays distinct voltage-dependent diffraction patterns due to the two different electrodes. The diffraction patterns are studied both computationally and experimentally, with good agreement between the results obtained. Both the diffraction pattern and efficiency from the device could be switched by varying the applied voltage across the liquid crystal layer.