Ultrasmall gold nanoparticles (2 nm) were surface-coated with photoswitchable 3-azopyridine ligands by ligand exchange with n-dodecanethiol-stabilized gold nanoparticles. Each gold nanoparticle carried about 66 dodecanethiol (DDT) ligands and 49 azo ligands. The azo ligands were reversibly switchable between the stable E- and the metastable Z-isomer by UV and green light irradiation as shown by UV-Vis and NMR spectroscopy. The photoswitching was not significantly affected by the conjugation of the azo ligand to the nanoparticle surface, despite the high density of ligands on the particle surface. This offers a pathway for photoswitchable systems on the nanoscale, for example, to manipulate supramolecular systems. The introduction of 0.5 wt% of the nanoparticles into a liquid crystalline host yielded a photoresponsive material which showed a reversible nematic-to-isotropic phase transition upon irradiation.