We present the structure and dynamics of highly concentrated core–shell nanoparticles composed of a silica core and a poly(N-isoproylacrylamide) (PNIPAm) shell suspended in water. With X-ray photon correlation spectroscopy, we are able to follow dynamical changes over the volume phase transition of PNIPAm at LCST = 32 °C. On raising the temperature beyond LCST, the structural relaxation times continue to decrease. The effect is accompanied by a transition from stretched to compressed exponential shape of the intensity autocorrelation function. Upon further heating, we find a sudden slowing down for the particles in their collapsed state. The q dependence of the relaxation time shows an anomalous change from τc ∝ q–3 to τc ∝ q–1. Small angle X-ray scattering data evidence a temperature-induced transition from repulsive to attractive forces. Our results indicate a temperature-induced phase transition from a colloidal liquid with polymer-driven dynamics toward a colloidal gel.