Abstract. First experiments on atomic photoionization and molecular dissociation have been performed by taking advantage of the unprecedented characteristics of the Free Electron Laser in Hamburg (FLASH) combined with a separate near-infrared (NIR) femtosecond laser. In a series of two-color experiments, the photoionization of rare gases in the presence of a strong NIR dressing field as well as the polarization dependence of this process were investigated systematically. A detailed analysis of the partial cross sections for the two-color two-photon ionization process was carried out for low dressing fields. Higher dressing fields give rise to multi-photon processes, which are observed and analyzed without undesirable interferences, a beneficial consequence of the monochromaticity of the FLASH radiation. The experimental results are compared with theoretical descriptions for two-color above threshold ionization obtained by employing second-order perturbation theory and the "soft-photon" approximation. In addition, complementary information was obtained on the sequential two-photon double ionization of Ne, which was made possible by the short and intense FLASH pulses. As a starting point for future time-resolved studies on molecular dissociation, a proof-of-principle experiment on the hydrogen diatomic system was carried out. In a typical pump-probe arrangement, excited neutral fragments, which were formed during photo-induced dissociation by the FLASH radiation, were identified via single-and multi-photon ionization induced by the time delayed optical laser.