Palmatine and berberine, imperative isoquinoline alkaloids, have many potential therapeutic uses. We visualized the stepwise complex formation between these alkaloids and sodium dodecyl sulfate (SDS), a known anionic surfactant characterizing alkaloid-induced SDS micelle formation at different stages. UV-visible spectra directly divulged the complex formation at different stages, and this was supported by the fluorescence emission spectral and fluorescence anisotropy data. Fluorescence quenching experiments precisely located the alkaloid molecules in the micellar environment above the critical micelle concentration (CMC). The thermodynamics of the alkaloid binding and micelle formation suggested an exothermic enthalpy-driven initial electrostatic binding followed by an endothermic entropy-driven binding in the micellar core, both being spontaneous in nature. The atomic force microscopy results clearly visualized the shape and size of the alkaloid-induced micelles. This study presents stepwise characterization of alkaloid SDS interaction below and above the CMC.