Abstract: An optically variable device and method of manufacturing the device is disclosed, the device including a plurality of zero-order diffraction grating elements some of which are modulated such that a coloured at least partially polarized image is visible to a person viewing the device, observing a first optically variable effect when the device is rotated about an axis substantially perpendicular to the plane, and a second optically variable effect when the device is viewed under polarized light and rotated about an axis substantially perpendicular to or parallel with the plane. The device is particularly suitable for security documents such as bank notes. Preferably, the first optically variable effect is produced by a change in brightness and/or color of the grating elements and the second optically variable effect may likewise be produced by a change in brightness and/or color of the grating elements.