Reflective polarizers can be used as luminance enhancement films for LCD backlights via the polarization recycling process. The optical performances of a wire grid polarizer (WGP) as a reflective polarizer adopted in edge-lit backlights were investigated by luminance evaluation and a time-domain simulation technique. The results were compared to those of a commercial dielectric multilayer film. The luminance gain factor of WGP was smaller than that of the multilayer film by 18%. This was attributed to a much larger internal loss of WGP due to light absorption by metal wires. The internal losses of both reflective polarizers and the polarization conversion efficiency of the backlight were obtained numerically based on a phenomenological model. The optical performances of WGP were optimized by using a time-domain simulation technique. The luminance gain increased and was found to become comparable to, but slightly less than the case of the dielectric multilayer film with decreasing line width.