Tightly confined water within a small droplet behaves differently from bulk water. This notion is obtained on the basis of several reports showing unusual behaviors of water droplet residing at the core of a reverse micelle. In this study, we have shown a well-known hydrophobic dye, coumarin 153 (C153), which prefers to reside at the water-rich region inside the dendrimer molecule. Optical density (OD) measurement at the absorption peak of C153 shows that it is almost insoluble in bulk water but highly soluble in aqueous dendrimer solution. The OD of C153 increases several times in the latter case as compared to that in the former. We found the most interesting observation when we compared the data from fluorescence correlation spectroscopy (FCS) with the fluorescence anisotropy decay of C153 in aqueous dendrimer solution. The FCS measurement reveals a much slower translational diffusion time (tau(D)) of C153 attached to a dendrimer molecule as compared to that of free C153 in bulk water in the absence of dendrimer. The slower tau(D) in the former case is commensurate with the size of the dendrimer molecule. This is possible only when C153 is encapsulated by the dendrimer molecule. In contrast to the FCS study, the fluorescence anisotropy decay of C153 in water remains largely invariant after addition of the dendrimer. This can happen if a bulk-water-like environment at the C153 surroundings is preserved within the C153 dendrimer complex. This supports our institutive expectation that C153 resides within the water-rich peripheral cavities of the dendrimer molecule. A more expected binding of C153 to the hydrophobic core of dendrimer may not be possible here because of an inadequate size of the dendrimer core.