2-(4'-Pyridyl)benzimidazole (4PBI) can exist in several states of protonation, having three basic nitrogen atoms. The equilibria involving these states, in ground as well as in excited states, are found to be affected significantly by cyclodextrins (CDs). The formation of inclusion complexes of this compound with all three varieties of cydodextrins is observed to be more favorable at pH 9 than at pH 4, due to the predominance of the neutral form of dye at pH 9. The binding affinity of 4PBI to CDs is found to be governed by two factors: (i) the size of the host and (ii) the mode of insertion of 4PBI. We find that, for the host with a smaller cavity (alpha-CD), insertion of the dye with a pyridyl face is favored, whereas, for gamma-CD, the preference is shifted toward the benzimidazole face of the dye. For beta-CD, the binding affinity of the dye is maximum due to perfect cavity matching with the guest. A combination of steric factor and hydrogen bonding interaction is found to be responsible for modulation of the protonation-deprotonation equilibria of the guest molecule in the inclusion complex. Surprisingly, a protonated form is found to be promoted upon inclusion in cydodextrins, under certain conditions. This is an unusual behavior and has been rationalized by prototropism involving the hydroxyl protons of cyclodextrin molecules.