We have studied the second-order nonlinear optical response of a solidified nematic polymer containing a photoactive organic dye as a dissolved solute or as phase-separated crystals. Solvation of the dye in the main-chain nematic is evidenced by melting point depression with increasing dye concentration up to 20% by weight. Electrical poling of the dye-polymer alloy below the melting point of the nematic host results in strong second harmonic intensities from an infrared laser pulse passing through the medium. A comparison of thermally stimulated discharge spectra of poled alloys with nonlinear optical measurements indicates that dipolar ordering of solute molecules in the electric Held gives rise to second harmonic activity. Interestingly, magnetically induced order in the nematic solvent can result in second harmonic signals which are 6-9 times more intense, equivalent to the second-order susceptibility of the system tripling. In this macroscopically organized environment, polar ordering of the dye solute in the electric Held occurs more rapidly than in the polydomain nematic phase. Furthermore, the thermal stability of the polar dye network is greater as well in the aligned environment. The magnetically aligned nematic alloy can be regarded as an“Ising-like”medium in which the nematic and the magnetic fields confine dipolar dye molecules along directions parallel or antiparallel to the applied electric Held. Previous calculations predict an increase of the second-order susceptibility by a factor of 5 in an idealized system as compared to a factor of 3 found in these experiments.