The development of simple yet powerful methods for monitoring enzyme activity is of great significance. Herein, a facile, convenient, cost-effective, and continuous fluorescent method for the detection of arginase and its inhibitor has been reported based on a host-guest interaction-controlled and enzymatic hydrolysis-controlled luminescent nanoswitch. The fluorescence intensity of 6-aza-2-thiothymine-stabilized gold nanoparticle (ATT-AuNP) is enhanced by l-arginine, owing to the formation of a supramolecular host-guest assembly between the guanidine group of l-arginine and ATT molecules capped on the AuNP surface. However, hydrolysis of l-arginine, catalyzed by arginase, leads to a decrease in the fluorescence intensity of l-arginine/ATT-AuNPs hybrids. Upon incorporation of the arginase inhibitor l-norvaline, the fluorescence of the ATT-AuNP-based detecting system is restored. The linear range of arginase activity determination is from 0.0625 to 1.15 U/mL and the limit of detection is 0.056 U/mL. The half-maximal inhibition value IC50 of l-norvaline is determined to be 5.6 mM. The practicability of this luminescent nanoswitch is validated by assaying the arginase activity in rat liver and monitoring the response of rat liver arginase to pharmacological agent. Compared to the existing fluorescent method of arginase activity assay, the approach demonstrated here does not involve any complicated technical manipulation, thereby greatly simplifying the detection steps. We propose that this AuNP-based luminescent nanoswitch would find wide applications in the field of life sciences and medicine.