Luminescent conjugated polyelectrolytes (LCPs) can upon interaction with biological macromolecules change their luminescent properties, and thereby serve as conformation- and interaction-sensitive biomolecular probes. However, to exploit this in a more quantitative manner, there is a need to better understand the photophysical processes involved. We report studies of the conjugated pentameric oligothiophene, derivative p-FTAA, which changes optical properties with different p-FTAA concentrations in aqueous buffers, and in a pH and oxygen saturation dependent manner. Using dynamic light scattering, luminescence spectroscopy and fluorescence correlation spectroscopy, we find evidence for a monomer dimer equilibrium, for the formation of large clusters of p-FTAA in aqueous environment, and can couple aggregation to changed emission properties of oligothiophenes. In addition, we observe the presence of at least two dark transient states, one presumably being a triplet state. Oxygen was found to statically quench the p-FTAA fluorescence but also to promote molecular fluorescence by quenching dark transient states of the p-FTAA molecules. Taken together, this study provides knowledge of fluorescence and photophysical features essential for applying p-FTAA and other oligothiophene derivatives for diagnostic purposes, including detection and staining of amyloid aggregates.