A liquid crystal display of a transflective IPS system in which a lateral electric field is applied to a liquid crystal layer. Polarization films are arranged on the entire surface of a transmissive display unit and a reflective display unit in a manner similar to a transmissive IPS system. An inner retardation layer whose retardation is equal to a half wave is formed in the reflective display unit. A retardation of the liquid crystal layer of the reflective display unit is set to a quarter wave. Thus, a reflective display can be performed in a wide range of environment from a light place to a dark place and a transmissive display of a wide viewing angle and high picture quality can be performed.