The use of a highly aligned carbon nanotube (CNT) sheet as a multifunctional constituent for liquid crystal (LC) displays and electro-optic LC applications is assessed. The CNT sheet can perform a dual function: one is an alignment layer for LCs, replacing the commonly used rubbed polyimide film, and the other is a transparent conducive layer, taking the place of indium fin oxide. The hydrophobic treatment improved the adhesion quality between aligned CNT bundles and the glass substrate, which helps to preserve the inherently aligned nanogroove morphology of transparent CNT sheets. The test LC display cells, comprising 4-cyano-4'-pentylbiphenyl molecules sandwiched between CNT-sheet-on-glass substrates, demonstrate the operation characteristics comparable to that of the conventional cell under temperature variation and ac electric field of 1 kHz. The results offer a possibility of deploying multifunctional CNT-sheet alignment layers in LC-based devices, especially in the future flexible display applications.