The electro-optic performance characteristic of polymer-dispersed liquid crystal (PDLC) composite films out of poly(vinyl butyral) (PVB) and nematic liquid crystal (E7) have been studied for a wide range of PVB-E7 composite compositions (20-70 wt % of E7). Composites were prepared by solvent casting from chloroform at room temperature. A scanning electron microscopy study showed that a E7 phase is continuously embedded in chink-like structure of PVB matrix. Optical transmittance of the composite films (of 60 and 70 wt % loading of E7) under an alternating current (ac) electric field (0-250, Vp-p) and frequency (50 Hz to 1 KHz) were measured employing He-Ne laser (lambda = 632.8 nm). The results indicate that the (PVB-E7) composite exhibits a memory effect. In the memory state, higher transmittance is preserved without applying voltage. The memory state can be erased and changed to the scattering Off-state by heating the film to the clearing temperature of the liquid crystal.