The equilibrium constants and thermodynamic parameters for aggregate formation of bis(2,4-dihydroxyphenyl)-squaraine and bis(2,4,6-trihydroxyphenyl)squaraine have been studied by absorption spectroscopy. The values of the equilibrium constant, K, for the dimerization of SQ1 and SQ2 in acetonitrile at 300 K are (3.1 +/- 0.3) X 10(5) M(-1) and (2.2 +/- 0.1) X 10(5) M(-1), respectively. Iodine enhances the aggregation process. This has been attributed to the formation of charge-transfer complexes between iodine and the dyes and the stronger tendency of these complexes to form aggregates. Excitation of the squaraine dimer with a 532-nm laser pulse leads to the formation of the excited singlet state of monomeric dye as the excited dimer dissociates within the laser pulse duration of 18 ps.