Studies of 3-O-(2-methylnaphthyl)-beta-cyclodextrin (1) with various spectroscopic methods including H-1 NMR, fluorescence, UV-vis, and circular dichroism yield information on the character of this compound. NOESY data indicate the naphthyl moiety binds inside the cyclodextrin cavity. H-1 NMR concentration-dependent studies reveal that 1 is a dimer at concentrations of > 10(-4) M. The circular dichroism spectrum of dilute samples is consistent with a monomer. Analysis of 1 complexing with 2-(p-toluidino)-6-naphthalene-sulfonate (TNS) with both fluorescence and H-1 NMR demonstrates that a hydrophobic interaction occurs between 1 and TNS. The concentration dependence of this interaction is strongly affected by the dimerization equilibrium of 1.