Instead of performing text-conditioned denoising in the image domain, latent diffusion models (LDMs) operate in latent space of a variational autoencoder (VAE), enabling more efficient processing at reduced computational costs. However, while the diffusion process has moved to the latent space, the contrastive language-image pre-training (CLIP) models, as used in many image processing tasks, still operate in pixel space. Doing so requires costly VAE-decoding of latent images before they can be processed. In this paper, we introduce Latent-CLIP, a CLIP model that operates directly in the latent space. We train Latent-CLIP on 2.7B pairs of latent images and descriptive texts, and show that it matches zero-shot classification performance of similarly sized CLIP models on both the ImageNet benchmark and a LDM-generated version of it, demonstrating its effectiveness in assessing both real and generated content. Furthermore, we construct Latent-CLIP rewards for reward-based noise optimization (ReNO) and show that they match the performance of their CLIP counterparts on GenEval and T2I-CompBench while cutting the cost of the total pipeline by 21%. Finally, we use Latent-CLIP to guide generation away from harmful content, achieving strong performance on the inappropriate image prompts (I2P) benchmark and a custom evaluation, without ever requiring the costly step of decoding intermediate images.