The principle and technique of real-time pseudo-color encoding for optical density images using a liquid crystal light valve(LCLV) are described and a simplified hybrid field effect mode of LCLV is presented, the polarized modulation of linear polarization readout light passed through liquid crystal layer is mathematically analysed, and the relations between the projection intensity and the voltage on the LC layer, the polarization direction and the wavelength of the readout light are given. With these results, the principle and essence are discussed in detail. Experiments show that our analysis method is effective. At last, some pseudo-coloring images are presented.