An LCD device with an improved contrast ratio and a reduced electric power consumption and a driving method thereof are disclosed. The LCD device and the driving method thereof generate a data modulation control signal using single frame image data to be displayed on a liquid crystal panel, and then generating a plurality of modulated local dimming control signals for a plurality of divisional regions of the divided single frame image data. A modulated data, in which the single frame image data is compensated with the data modulation control signal is generated and applied to the liquid crystal panel. A plurality of driver signals each corresponding to the modulated local dimming control signals are applied to the blocks of a backlight unit. The divisional regions are opposite to the blocks, respectively.