It is well known that doping nanoparticles (NPs) in liquid crystals (LCs) can easily change the physical and electro-optical properties of LC mixture. In this paper, we demonstrate homogeneous, aligned nematic LC (N-LC) system dispersed in iron oxide (Fe2O3) NPs. The prepared Fe2O3 NPs have an average particle size of 50 nm. By changing the doping concentration of Fe2O3 NPs, we observed the characteristics of LC systems. Electrooptical (EO) characteristics included faster rising and falling times (2.14 ms and 10.24 ms, respectively) and lower driving voltage (1.45 V) compared with a pure N-LC cell. We demonstrated these results via the relationship between dielectric con- stant and LC device properties. The results were verified by software simulation based on general physical properties. Moreover, we observed that LC system with Fe2O3 NPs could be accomplished without capacitance hysteresis by capturing charged impurities. Superior performance of LC cell with Fe2O3 NPs indicates that the proposed LC system have strong potential for use in the production of advanced LC displays.