Liquid crystals (LCs) are an interesting class of materials that are attracting significant attention due to their ever-growing applications in a wide variety of fields such as liquid crystal display (LCD) technology, materials science and bioscience. In recent years, along with the developments of materials at the nanoscale, doping LCs with nanoparticles (NPs) has emerged as a very promising approach for improving LC properties. Nanoparticle additives can introduce novel effects on optical and electro-optical properties of nematic liquid crystals (N-LCs), such as altered molecular alignment, faster response time and increased efficiency. This thesis studies the impacts that the inclusion of metallic NPs made of gold or semiconductor CdSe quantum dots (QDs), have on optical and electro-optical properties of N-LCs. Using polarized optical microscopy and detailed capacitance and transmittance measurements of nematic mixtures in electro-optic test cells, characteristics such as optical texture, phase transition temperatures, switching voltages and dielectric anisotropy are investigated in pure as well as doped samples. Surface ligands in NPs and their chemical functionalization play an important role in the LC-NP interactions, largely by determining the dispersibility of NPs and stability of the nanocomposites. One important objective of this thesis is to investigate and prepare a series of gold nanoparticles (Au NPs) with specially formulated robust coatings that maximizes solubility and stability in LC medium. Silanization of NPs is developed as a method to overcome the stability challenge. The functionalization of silanized NPs with aliphatic ligands or liquid crystalline molecules, provides chemically and thermally stable NPs with hydrophobic and structurally compatible surfaces required for dispersion in N-LCs. After complete characterization the synthesized particles are used to make the new nematic nanocomposites. By analysis of the structure-property relationships governing LC-nanomaterial composites and by comparison of new results and data from previous studies on other types of NPs, this thesis will further reveal the mechanism of the interrelations between host LC molecules and NP, considering the role of variables such as core composition, size and surface chemistry of NPs (e.g. siloxane shell, aliphatic ligand vs. liquid crystalline ligand) in achieving stable LC composites with desired optical and electro-optical properties.