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We have studied the mechanism and the dynamics of degenerate four-wave mixing in a nematic liquid crystal film. Nanosecond laser pulses are used to generate an index grating associated with the changes in the density and in the order parameter. We have measured and analyzed the contributions from these two mechanisms, their interference effects rise and decay time constants, and have also performed a detailed analysis of the diffraction efficiency. This study quantitatively characterizes the potential usefulness of nematie films for four-wave mixing based applications.