We report on the characterization of an all optical switching effect that takes place when a UV light beam irradiates an azo-POLICRYPS diffraction grating. This high quality polymeric structure is utilized to confine and stabilize a well aligned nematic liquid crystal (NLC) film doped with a small percentage of azo-NLC molecules. The optical control of the grating diffraction efficiency is obtained by exploiting the photochemical phase transition between the nematic and the isotropic phases of the liquid crystal, based on the photoisomerization of the azobenzene guest molecules. The switch ON-OFF of the grating diffraction efficiency is triggered by a UV pump laser and is investigated by means of a low power red probe beam.