An optically tunable and rewritable liquid crystal (LC) diffraction grating cell has been revealed that consists of an optically active and an optically passive alignment layer. The grating profile is created by confining the LC director distribution in alternate planar and twisted alignment domains by means of photoalignment of the LCs. The proposed grating is optically tunable for diffractive and nondiffractive states with a small response time that depends on the exposure energy and LC parameters. In addition, the grating can be erased and rewritten for different diffracting characteristics. These optically tunable diffractive elements could find application in various photonic devices.