We describe the design, fabrication, and performance of a high-speed, continuously tunable, and resetfree polarization controller based on nematic liquid-crystal (NLC) microcell wave plates fabricated directly between the tips of optical fibers. This controller utilizes a pulsed driving scheme and optimized NLC materials to achieve a stepwise switching speed of 1 deg/μs, for arbitrary rotation angles with moderately low voltages. This compact microcell design requires no bulk optical components and has the potential to have low insertion loss. We describe the performance of these devices when implemented in polarization mode dispersion compensators for 40 Gbit/s systems. The good optical properties and the nonmechanical, high-speed, and low-power operation suggest that this type of device might be considered for some applications in dynamic compensation of polarization mode dispersion, polarization analysis, polarization division demultiplexing, and polarization scrambling in high-speed optical communication systems.