The invention is directed to a holographic data storage system including a spatial light modulator device (SLM) that comprises optical elements in the form of polymer dispersed liquid crystal (PDLC) elements. The PDLC elements are individually controllable, and can be made substantially transparent or substantially diffusive. The “on” or “off” state of each PDLC element is defined by whether the given PDLC element is transparent or diffusive. Additional states may also be defined for the PDLC elements, e.g., based on a level of diffusiveness of the PDLC elements. Also, a mirror layer may be added adjacent the PDLC elements to define a reflective-mode SLM. In any case, the SLM is used to encode bit maps into a holographic object beam.