The 2,2'-bipyridine-3,3'-diol molecule (BP(OH)(2)) was investigated as a potential photophysical probe in inclusion and biological studies. Binding of BP(OH)(2) to cyclodextrins (CDs) and human serum albumin (HSA) was studied by following the changes in its absorption and fluorescence spectra. The stoichiometric ratios and binding constants of the complexes were deduced by fitting the changes in the spectral intensity to binding isotherms. The stoichiometric ratio in the BP(OH)(2)/(alpha-CD) complex is dominated by 1:2, whereas in all other CDs and in HSA this ratio is 1:1. The structure of the BP(OH)(2):(alpha-CD)(2) complex, calculated using ab initio methods, indicates that the inclusion of the BP(OH)(2) molecule is axial and centered between the two cavities of alpha-CD with van der Waals and electrostatic interactions dominating the binding. Analysis of these results along with the inclusion results of BP(OH)(2) in beta-CD, methyl-beta-CD, 2,6-di-O-methyl-beta-CD, and gamma-CD shows that absorption and fluorescence of BP(OH)(2) are very sensitive to the change in the cavity size of CD and its hydrophobicity. This change is reflected in the form of a decrease in the intensity of the absorption peaks of the BP(OH)(2)/water complex in the region 400-450 nm and a red shift in the fluorescence peak as the cavity size decreases and its hydrophobicity increases. Binding of BP(OH)(2) as a probe ligand to HSA, a prototype protein, reflects the hydrophobic interior of HSA in a similar manner. The spectral changes indicate that BP(OH)(2) binds in the hydrophobic cavity of HSA's subdomain IIA. The results presented here show that BP(OH)(2) can be used in binding sites and biological systems as a microenvironment-sensitive probe.