The cyanine dye merocyanine 540 (MC540) was incorporated as an optical sensor into small and large unilamellar phospholipid vesicles. The absorption spectrum of the amphipathic dye was used to monitor the sublytic and lytic actions of the nonionic detergent Triton X-100 on model membrane systems. Curve-fitting techniques were applied to separate the monomer and dimer components of the MC540 visible spectrum. The maximum absorption wavelength (lambda(max)) of the monomer band is sensitive to micropolarity changes, while dimer formation is related to environmental polarity as well as to vesicle curvature. Triton X-100 incorporation into the bilayer leads to a more polar environment in the hydrocarbon region near the interface, so that solubilization is accompanied by a blue-shift of lambda(max) and a decrease in the monomer/dimer area ratio. A surfactant-induced transient increase in size of small unilamellar vesicles, which occurs within a given range of sublytic surfactant concentrations, is also detected by MC540 as an increase in the proportion of probe monomers. Effective detergent/lipid ratios R(e)(ON) and R(e)(OFF) have been computed, corresponding to the real detergent-to-lipid molar ratio in the bilayer (or mixed micelle) at which a spectral feature of MC540 is first or last detected. R(e)(ON) for the decrease in monomer/dimer ratio is 0.13, well ahead of the earliest signs of solubilization, detected by light scattering at R(e) = 0.71. At the other end of the process, light scattering informs that solubilization is complete at R(e) = 3.0, while R(e)(OFF) for the blue-shift of lambda(max) is 4.5, this parameter reporting on changes in the mixed micelles apparently not detected by light scattering. It is concluded that MC540 is a sensitive and informative optical probe, supplying information along an unusually broad range of detergent/lipid ratios.