Two diblock copolymers composed of polystyrene and a liquid crystalline azobenzene-containing polymethacrylate were used as model systems to investigate the confinement effects on the photoalignment, photochemical phase transition, and thermochromic behavior of the azobenzene polymer. The study finds that when confined in the microphase-separated domains in the diblock copolymers, the azobenzene polymer behaves differently with respect to the homopolymer having no confinement. The confinement effects are manifested by (1) decreased photoinduced and thermally enhanced orientation of azobenzene mesogenic groups in different aggregation states, (2) slower transformation from a liquid crystalline phase to the isotropic state triggered by the trans-cis photoisomerization and slower recovery of the liquid crystalline phase after the thermally induced cis-trans back-isomerization, and (3) severely reduced and even suppressed changes in the aggregation states of azobenzene groups on heating, which is at the origin of the thermochromic property. The common cause of these confinement effects is the restriction imposed by the confining geometry on either an order-disorder or a disorder-order reorganization process involving the motion and rearrangement of azobenzene groups.