Birefringence observations and rheological measurements were used to monitor the phase behavior of Mg/Al (the molar ratio of Mg(2+) to Al(3+) being 2:1) layered double hydroxide (LDH) suspensions. The suspensions of concentration lower than 16% (w/w) appear isotropic (I) between crossed polarizers. In contrast, the suspensions of concentration between 16% and 30% (w/w) showed an isotropic (I)-nematic (N) biphasic coexistence. Detailed observations led us to divide the suspensions in the gap into three groups according to their behaviors: the suspensions with concentration between 16% and 25% (w/w) experienced an I-N phase transition and particle sedimentation simultaneously, while the suspensions of 25% to 27% (w/w) showed I-N transition after particle sedimentation, and in the suspension of 30% (w/w), a critical sol-gel transition appeared with an I-N transition. Above 33% (w/w), the gel network hindered a complete I-N separation in the suspensions. Upon raising the NaCl concentration, the liquid crystalline phase transition and the sol-gel transition shifted to higher particle concentrations. The facts demonstrate that the phase behavior of aqueous LDH suspensions is controlled by the competition among liquid crystal phase transition, sedimentation, and gelation.