Holographic gratings have been fabricated in networked polyurethane acrylates with various cross-linking densities. It was found that low (f = 2) and high (f = 6) functionality monomers gave narrow and clean polymer–liquid crystal (LC) phase separation due presumably to the insufficient migration of LC molecules out of the polymer domains. However, the mechanisms leading to poor phase separation seem different, i.e., reaction at a slow rate for f = 2, and entrapment of LC molecules within highly networked polymer for f = 6. With intermediate monomer functionality (f = 3), relatively large channels with large LC droplets gave the greatest diffraction due to a large difference in refractive index between polymer and LC phases.