Absorption spectra and fluorescence properties of 2-hydroxy-substituted Nile Red (HONR) have been studied in various solvents and micelles. The solvent dependence of the rate constant of the internal conversion was found to exhibit two entirely distinct domains. Going from apolar toward polar solvents, first, the deceleration of the radiationless deactivation was observed due to the diminishing extent of the vibronic coupling between the neighboring S-1 and S-2 singlet excited states. After reaching a minimum, the rate of the transition to the ground state significantly increased in alcohols because of the efficient energy dissipation via intermolecular hydrogen bonding. The correlations of the excited-state energy, fluorescence lifetime, absorption, and fluorescence maxima with the E-T(30) solvent polarity parameter were used to characterize the local environment of HONR in micelles. Fluorescence quenching studies provided further evidences for the differences in the binding site of the dye in cationic, anionic and nonionic micelles.