The absorption and fluorescence spectra of 3.3'-dioctadecyloxacarbocyanine [DiOC(18)(3)], a cationic oxacarbocyanine dye have been studied in aqueous and nonaqueous media containing egg phosphatidylcholine (PC) as well as in different solvents of diverse nature. The results show the evidence of complex formation of the dye in the ground and in the excited states with PC. The excited state interaction of the dye with PC suggests the electron transfer from PC to dye and this is supported by photovoltage generation in a photoelectrochemical cell consisting of dye and PC in aqueous medium. An attempt has been made to determine the polarity of the microenvironment of the dye in PC liposome or PC reverse micelle from the spectral studies of the dye in different solvents of known polarity. (C) 2001 Elsevier Science Ireland Ltd. All rights reserved.