TiO2 rutile nanorods of average length L = 160 +/- 40 nm and average diameter D = 15 +/- 5 nm have been synthesized through a seed-mediated growth process by TiCl4 hydrolysis in concentrated acidic solution. These nanorods were dispersed in water to yield stable (aggregation-free) colloidal aqueous suspensions. At volume fractions phi > 3%, the suspensions spontaneously display a phase separation into an isotropic liquid phase and a liquid-crystalline phase identified as nematic by X-ray scattering. At phi > 12%, the suspensions form a nematic single phase, with large order parameter, S = 0.75 +/- 0.05. Very well aligned rutile films on glass substrate were produced by spin-coating, and their photocatalytic properties were examined by monitoring the decomposition of methylene blue under UV light. We found that UV-light polarized along the quadratic axis of the rutile nanorods was most efficient for this photocatalytic reaction.