A waveguide polarization recovery system both polarizes the input light energy for use with an LCD imager and converts the polarity of unusable light energy to add to the illumination of the LCD imager. The compact polarization recovery waveguide system generally includes: (1) an input waveguide that provides non-polarized light energy into the system; (2) an output waveguide that receives polarized light energy from the system; (3) a polarized beam splitter that received the light energy from the input waveguide and transmits light energy of a first polarization type and reflects light energy of a second polarization type, and (4) a wave plate that modifies the polarization of either the transmitted or reflected light energy. The polarization recovery system also generally includes one or more mirrors that are positioned as need to direct the transmitted and the reflected light energy to the output waveguide. The input and output waveguides may be shaped as needed by the projection system. For example, either one or both of the input and output waveguides may be tapered as needed to produce a desired image. In the waveguide polarization recovery system, the input and output waveguides are configured to have either an either a substantially parallel or a substantially perpendicular orientation. In another embodiment, the waveguide polarization recovery system further includes has one or more "gaps" of optically clear material positioned between the optical components to encourage the occurrence to total internal reflection that minimizes the loss of the optical energy by the system.