Novel two-phase materials based on nematic liquid crystals (LC E7) filled with poly(propylene imine) dendrimers of 2-3 nm diameter were investigated for application in light-scattering, electro-optical switches. Polarizing optical microscopy, differential scanning calorimetry and rheological experiments all indicate the presence of a pronounced polydomain structure within these LC mixtures. The molecular ordering and dynamics of the dendrimer-filled nematics were studied in more detail by dielectric relaxation spectroscopy. The director order parameter S-d was derived from the strength of the two principal molecular relaxations, alpha and delta, in the presence and absence of an electric field. In addition, a three-phase model was applied for determining the size of the different LC populations in the mixture. A substantial decrease in the fraction of randomly oriented LC was found upon application of a d.c. field. Over a broad temperature range the LC molecular dynamics were assessed from the variation in the strength of the dielectric relaxations as a function of the d.c. bias. A fast response was found at room temperature. Electro-optical switching experiments showed that the dendrimer-filled LCs can be switched rapidly from a light-scattering, opaque state to a more transparent state.