Photodissociation and recombination of an F-2 molecule embedded in an Ar cluster is investigated. The electronic states involved are described by the valence bond approach for the F(P-2)+F(P-2) interaction, with spin-orbit coupling included and the anisotropic interactions between F and Ar atoms described by the diatomics-in-molecules (DIM) approach. The potential energy surfaces for 36 electronic states and the nonadiabatic couplings between them are constructed in this basis. The surface hopping method is used for dynamical simulations. The main results are: (i) Spin nonconserving transitions play a crucial role both in the dissociation and in the recombination dynamics. (ii) The ratio between the population of the triplet states and the population of the singlet states reaches the statistical equilibrium value of 3:1 60 fs after the photoexcitation, but the population of specific singlet and triplet states remains nonstatistical for at least 1.5 ps. (iii) Recombination on the only bound excited state ((3)Pi (u)) becomes significant within 100 fs and builds up to 40% of the trajectories within 1 ps after excitation of the cluster with 4.6 eV. This is in accord with recent experiments on ClF/Ar solid, where strong emission from this state was found. (iv) 3% of recombination on the ground (1)Sigma (g) state is found as well. (v) For excitation energy of 4.6 eV, the dissociation can be direct or delayed. In delayed dissociation the F photofragments hit the Ar cage more than once before escaping the cage. (vi) For excitation energy of 6.53 eV the yield of dissociation was found to be 100%, and the dissociation is direct only.