Multilevel anisotropic diffractive optical elements (DOEs), in which digitized spatial patterns of optical birefringence are fabricated by means of stepping photoalignment technique, has been demonstrated using photo-cross-linkable polymer liquid crystals (PCLCs). The polarization state of incident light is converted into a different polarization state by diffracting light in the practical, i.e., transparent in visible region and thermally stable, multilevel anisotropic DOEs, and both polarization azimuth and ellipticity can be widely controlled by their birefringence patterns. Theoretical considerations for such polarization conversion were also performed using the Jones calculus and diffraction theory and well-explained experimental observations.