In this work, we studied a newly reported class of colossal nonlinear effects observed near the nematic-isotropic temperature transition. We show that the origin of this nonlinearity may be attributed to the onset of critical opalescence. Large diffraction efficiency (23%) and colossal nonlinear refractive index (n(2) approximate to 50 cm(2)/W) has been measured in randomly oriented thin (1 mu m) films of 5CB liquid crystals doped with small quantities of the azo dye methyl red (1%wt).