Three azobenzene-containing side-chain liquid crystalline polymers (SCLCPs) were grafted onto a styrene-butadiene-styrene (SBS) triblock copolymer to yield photoactive thermoplastic elastomers. The SCLCPs used were a polymethacrylate and two polyacrylates having different glass and phase transition temperatures. We have investigated the stretching-induced orientation of azobenzene mesogens, the orientation erasure by UV irradiation, and the consequences on the formation of diffraction gratings on stretched films. The results show that a combination of high degree of orientation of traps-azobenzene in nonirradiated areas with an efficient photoisomerization leading to disordered cis-azobenzene in irradiated areas is necessary for an efficient diffraction grating. However, this is not the only mechanism responsible for the formation of grating. Changes in the anisotropic morphology of stretched SBS may occur in these elastomers as a result of the photoisomerization process, which contributes to the formation of grating in films under strain and accounts for the stable diffraction grating remained in the relaxed state. These azobenzene elastomers can be used to record gratings that display reversible changes in diffraction angle and efficiency and the diffraction efficiency of which also depends strongly on the polarization of the probe light as well as the alignment of the fringes with respect to the strain of the film.