Capsaicin is an ingredient of a wide variety of red peppers, and it has various pharmacological and biological applications. The present study explores the interaction of capsaicin with dimyristoylphosphatidylcholine (DMPC) lipid bilayer membrane by monitoring various photophysical parameters using its intrinsic fluorescence. In order to have a clearer understanding of the photophysical responses of capsaicin, studies involving (i) its solvation behavior in different solvents, (ii) the partition coefficient of capsaicin in different thermotropic phase states of lipid bilayer membrane, and (iii) its location inside lipid bilayer membrane have been carried out. Capsaicin has a reasonably high partition coefficient for DMPC liposome membrane, in both solid gel (2.8 ± 0.1 × 105) and liquid crystalline (2.6 ± 0.1 × 105) phases. Fluorescence quenching study using cetylpyridinium chloride (CPC) as quencher suggests that the phenolic group of capsaicin molecule is generally present near the headgroup region and hydrophobic tail present inside hydrophobic core region of the lipid bilayer membrane. The intrinsic fluorescence intensity and lifetime of capsaicin sensitively respond to the temperature dependent phase changes of liposome membrane. Above 15 mol %, capsaicin in the aqueous liposome suspension medium lowers the thermotropic phase transition temperature by about 3 °C, and above 30 mol %, the integrity of the membrane is significantly lost. © 2015 American Chemical Society.