Terpolymers of 50 mol % sodium 2-(acrylamido)-2-methylpropanesulfonate (AMPS), 1 mol % 1-(pyrenylmethyl)methacrylamide (PyMAm), and 49 mol % lauryl- or cyclododecyl- or adamantylmethacrylamide units were synthesized. A copolymer of 99 mol % AMPS and 1 mol % PyMAm units was also prepared as a reference polymer. Charge-transfer (CT) complexation, fluorescence quenching, and photoinduced electron transfer (ET) were studied, using methylviologen (MV2+) as an acceptor. In the terpolymers, the polymer-bound pyrene (Py) chromophores are compartmentalized in hydrophobic microdomains of a micellelike microphase structure formed by the terpolymers in aqueous solution, while the chromophores are exposed to the aqueous phase in the reference copolymer. In the compartmentalized systems, the CT complexation of Py with MV2+ was suppressed, but the fluorescence quenching was enhanced. Charge recombination (CR) of the primary ion pair generated by laser excitation was slowed by an order of magnitude as compared to that in the reference copolymer system, while very fast photoinduced forward ET occurred (within ca. 20 ps). Thus, the terpolymer systems showed charge separation that persisted for hundreds of microseconds. These findings were qualitatively interpreted in terms of sterical protection of the Py chromophore from a close contact with MV2+, although MV2+ is highly concentrated on the surface of the hydrophobic microdomain of the terpolymers. A sterically hindered primary ion pair of a looser structure with a longer lifetime may be formed in the compartmentalized systems. The lauryl group was significantly less effective in protecting Py than were the cyclododecyl and adamantyl groups. A judicious choice of the hydrophobic group is suggested to achieve an optimal compartmentalization of Py, which will lead to an optimal efficiency for charge separation.