A series of substituted pyridinium betaines of squaric acid have been prepared by quaternization reaction of 3- and 4-substituted pyridines with squaric acid. The products were characterized by means of elemental analysis, melting points, and their UV-vis and IR spectra. The UV-vis spectra of all investigated compounds in five different solvents were studied in detail. The UV-vis spectral elucidation has given evidence of the clearly distinct negative solvatochromism of the pyridinium betaines of squaric acid, characteristic for compounds with a dipolar electronic ground state structure. The two absorption bands observed in the visible region show a charge-transfer character, which determines their strong dependence on the polarity of the medium and the nature of the substituent. The investigation of the spectral behavior of pyridinium betaines of squaric acid has revealed their potential nonlinear optical and electro-optical properties. Furthermore, these compounds exhibit remarkable thermal stability, required for such applications. The eventual technical application of these colored single crystals is discussed.