Liquid crystal polarization volume gratings are one kind of geometrical phase Bragg gratings. They exhibit strong polarization selectivity, high diffraction efficiency, large diffraction angles, and simple fabrication, making them ideal for augmented reality systems. In this review, we introduce the working principle and optical properties of liquid crystal polarization volume gratings. Then, we summarize the recent research progress in this research field. In addition, we particularly discuss the research of liquid crystal polarization volume gratings and their potential applications in solving key challenges for augmented reality waveguide displays. Finally, we summarize the current issues and development trends of waveguide displays based on liquid crystal polarization volume gratings.