If we want to alter the amount of current flowing across a circuit, we have two options. We can change either the resistance on the circuit or the voltage being applied to it.

This relationship is represented by the basic Ohm’s Law equation, commonly written as **V = IR**, where **V** = voltage, **I** = current, and **R** = resistance. Strictly speaking, **V=IR** is the formula for the definition of electrical resistance, although for most practical purposes this is functionally interchangeable with Ohm’s Law proper.

It should be noted that a rheostat does not change voltage directly; the applied voltage remains constant across both component and circuit, unlike in a potentiometer. Instead, a rheostat adjusts current (and thus in effect voltage) by increasing or decreasing resistance. Precisely how it does this will depend on the type of rheostat resistor being used. Different rheostats have varying maximum power and resistance ratings, stated in Watts and Ohms respectively.

A linear rheostat, for example, changes resistance by dragging a sliding wiper that is in contact with a straight wire coil. Meanwhile, controlling resistance using a rotary rheostat involves turning a knob or dial to sweep the wiper around a U-shaped wire coil. Other basic rheostat types use similar but slightly different methods.

To answer the question ‘how do rheostats work?’, it is important to understand how to wire a rheostat circuit. We need to highlight the role of the terminals and connections on the resistor:

- A potentiometer uses three terminals - one at each fixed end, and a third connection at the sliding contact or wiper
- A rheostat uses just two active terminals, one of which is fixed to either fixed end (the other can be left alone or grounded), while the second is connected to the wiper
- As such, a potentiometer can be made to function as a rheostat by disconnecting one of the fixed terminals. A rheostat, however, cannot be made into a potentiometer by reversing the process

As the rheostat is connected via one fixed terminal and one sliding contact, the active length between these two connections can be altered when the wiper is moved along a wire coil. The path taken by the electricity bridging these connections is therefore either elongated or shortened.

In simple terms, this mechanical length adjustment is what creates variable resistance on the circuit, enabling the rheostat to alter and control current flow from A to B.