A simple and high yield synthesis of water-soluble arylazopyrazoles (AAPs) featuring superior photophysical properties is reported. The introduction of a carboxylic acid allows the diverse functionalization of AAPs. Based on structural modifications of the switching unit the photophysical properties of the AAPs could be tuned to obtain molecular switches with favorable photostationary states. Furthermore, AAPs form stable and light-responsive host-guest complexes with β-cyclodextrin (β-CD). Our most efficient AAP shows binding affinities comparable to azobenzenes, but more effective switching and higher thermal stability of the Z-isomer. As a proof-of-principle, we investigated two CD-based supramolecular systems, containing either cyclodextrin vesicles (CDVs) or cyclodextrin-functionalized gold nanoparticles (CDAuNPs), which revealed excellent reversible, light-responsive aggregation and dispersion behavior. To conclude, AAPs have great potential to be incorporated as molecular switches in highly demanding and multivalent photoresponsive systems.