Dynamic holographic gratings were investigated with thin films of polymer azobenzene liquid crystals by periodic induction of photochemical nematic-to-isotropic phase transition. On irradiation of writing beams (488 nm), multiple diffraction beams of a reading beam (633 nm) were immediately observed. The first-order diffraction efficiency reached to a maximum value within several tens of milliseconds: the rise time was approximately 50 ms for PM6AB2 films and 30 ms for PA6ABCN films. Quite large modulation in refractive index (similar to0.08) was obtained in both polymer films. Studies on effects of temperature and light intensity on the grating formation suggested that photochemical reactions of azobenzene moieties followed by photochemical phase transition in bright fringes of the interference pattern would be responsible for the formation of holographic gratings. By turning on and off the writing beams, the diffraction beams could be switched dynamically without significant fatigue.