We have developed a real-space implementation of time-dependent density-functional theory within the linear-response theory. The full dielectric or susceptibility matrices are expressed on a strictly localized orbitals basis. Such a localization allows an efficient calculation of all needed matrix elements. As a first application, we study the photoabsorption spectra of small metallic clusters and semiconducting molecules. Our results show that the main absorption features such as the Mie resonance of metallic clusters or the strong $\stackrel{\ensuremath{\rightarrow}}{\ensuremath{\pi}}{\ensuremath{\pi}}^{*}$ absorption peaks of benzene and fullerenes converge rapidly with respect to basis size and localization. The case of ${\mathrm{C}}_{48}{\mathrm{N}}_{12}$ aza-fullerenes is explored as a first step towards the study of the optical properties of doped fullerenes.