The Kerr effect, also called the quadratic electro-optic (QEO) effect, is a change in the refractive index of a material in response to an applied electric field. The Kerr effect is distinct from the Pockels effect in that the induced index change for the Kerr effect is directly proportional to the square of the electric field instead of varying linearly with it. All materials show a Kerr effect, but certain liquids display it more strongly than others. The Kerr effect was discovered in 1875 by Scottish physicist John Kerr.

Two special cases of the Kerr effect are normally considered, these being the Kerr electro-optic effect, or DC Kerr effect, and the optical Kerr effect, or AC Kerr effect.

The Kerr electro-optic effect, or DC Kerr effect, is the special case in which a slowly varying external electric field is applied by, for instance, a voltage on electrodes across the sample material. Under this influence, the sample becomes birefringent, with different indices of refraction for light polarized parallel to or perpendicular to the applied field. The difference in index of refraction, Δn, is given by

where λ is the wavelength of the light, K is the Kerr constant, and E is the strength of the electric field. This difference in index of refraction causes the material to act like a waveplate when light is incident on it in a direction perpendicular to the electric field. If the material is placed between two "crossed" (perpendicular) linear polarizers, no light will be transmitted when the electric field is turned off, while nearly all of the light will be transmitted for some optimum value of the electric field. Higher values of the Kerr constant allow complete transmission to be achieved with a smaller applied electric field.

Some polar liquids, such as nitrotoluene (C₇H₇NO₂) and nitrobenzene (C₆H₅NO₂) exhibit very large Kerr constants. A glass cell filled with one of these liquids is called a Kerr cell. These are frequently used to modulate light, since the Kerr effect responds very quickly to changes in electric field. Light can be modulated with these devices at frequencies as high as 10 GHz. Because the Kerr effect is relatively weak, a typical Kerr cell may require voltages as high as 30 kV to achieve complete transparency. This is in contrast to Pockels cells, which can operate at much lower voltages. Another disadvantage of Kerr cells is that the best available material, nitrobenzene, is poisonous. Some transparent crystals have also been used for Kerr modulation, although they have smaller Kerr constants.

In media that lack inversion symmetry, the Kerr effect is generally masked by the much stronger Pockels effect. The Kerr effect is still present, however, and in many cases can be detected independently of Pockels effect contributions.

The optical Kerr effect, or AC Kerr effect is the case in which the electric field is due to the light itself. This causes a variation in index of refraction which is proportional to the local irradiance of the light. This refractive index variation is responsible for the nonlinear optical effects of self-focusing, self-phase modulation and modulational instability, and is the basis for Kerr-lens modelocking. This effect only becomes significant with very intense beams such as those from lasers. The optical Kerr effect has also been observed to dynamically alter the mode-coupling properties in multimode fiber, a technique that has potential applications for all-optical switching mechanisms, nanophotonic systems and low-dimensional photo-sensors devices.

The magneto-optic Kerr effect (MOKE) is the phenomenon that the light reflected from a magnetized material has a slightly rotated plane of polarization. It is similar to the Faraday effect where the plane of polarization of the transmitted light is rotated.