This Small Business Technology Transfer Phase II project aims to develop a polarization insensitive liquid-crystal Fabry-Perot (LC-FP) optical demultiplexer for wavelength-division-multiplexing (WDM) communication systems. LC-FP filters have significant advantages over current technology due to its large tuning range, high finesse and low-voltage operations, which can lead to high performance and lost-cost. However, because this modulation is based on the optical anisotropy, only the extra-ordinary wave can be modulated in the FP resonator. This results in a polarization sensitive filter that greatly reduces its "field applications" in the WDM networks. The Phase I work proposed a polarization insensitive filter by use of polarization optics to manipulate the arbitrary polarization light into the FP cavity. The results of Phase I proved this concept by successfully demonstrating a LC-FP tunable filter operating on unpolarized light at 1.55 llm wavelength with a free spectral range (FSR) of 4 nm and a full-width-half-maximum of 0.5 nm. The purpose of Phase II is twofold: (1) Expand the FSR from 4 nm to 38 nm to make the device useful in WDM applications using Erbium doped amplifiers; and (2) Develop a procedure to mass-produce this WDM demultiplexer with consistently high performance at low-cost. Successful completion of this STTR program can resolve the polarization-sensitive drawback of the LC-FP filter and widen its application in WDM networks. The primary applications of this filter are the cable TV broadcasting, fiber-in-the-loop WDM networks, long distance telecommunication, and future all-optical networks. It can also be used in spectroscopic analysis and fiber-based environmental sensor applications.