Fluorescence probes based on excited state proton transfer (ESPT) have been recently developed for microheterogeneous media. The ESPT behaviour of a series of substituted naphthols (4-chloro-1-naphthol, 5-amino-1-naphthol, 4-methoxy-1-naphthol, 7-methoxy-2-naphthol, 3-amino-2-naphthol, 6-bromo-2-naphthol and 1-bromo-2-naphthol) is investigated in liposomes, using steady state and time resolved fluorescence studies. 4-Chloro-1-naphthol emerges as a successful ESPT probe even though 7-methoxy-2-naphthol and 4-methoxy-1-naphthol are also useful. The possible reason for this success is accounted on the basis of the difference in proton dissociation constants in excited state (pKa*) and ground state (pKa). The failure of aminonaphthols as ESPT probe is due to the existence of multiple equilibrium between different species and the low quantum yield of these molecules in non-polar media. The increased intersystem crossing in the case of bromonaphthol excludes its possibility as an ESPT probe. Among the seven-monosubstituted naphthols that have been screened, 4-chloro-1-naphthol emerges as a better choice for an ESPT probe. The neutral form fluorescence of this molecule correctly reflects the phase transition behaviour of DMPC liposome membranes. This probe also successfully senses the cholesterol-induced phase changes in lipid bilayer membranes.