An unusual electro-optical behavior of colloidal suspensions of dichroic, elongated (rod-shaped) pigment particles is reported. These suspensions exhibit nematic liquid crystal order at low volume fraction of the suspended particles (<15 wt%) and show a strong electric and optical response to an external electric field. Additionally, the characteristics of the optical response can be reversibly manipulated by illuminating the sample with light in its absorption band. The suspensions show a number of interesting phenomena like homeotropic-planar orientational transitions and light-induced pattern formation.