Aggregation properties of bis(3,5-dibromo-2,4,6-trihydroxyphenyl)squaraine (1) and bis(3,5-diiodo-2,4,6-trihydroxyphenyl)squaraine (2) have been examined in buffer and in the presence of electrolytes, beta-cyclodextrin, micelles and DNA, These dyes were found to form aggregates in buffer and methanol-water solutions that have absorption bands blue-shifted to those of the monomeric forms. The iodo derivative 2 forms aggregates at much lower concentrations (1.7 x 10(-6) M) compared to the bromo derivative 1 (2.35 x 10(-6) M) in 20% (vol/vol) methanol-buffer solution. Increase in methanol concentration in methanol-water solutions resulted in the disruption of the aggregates. The intermediate dimer in the monomer to aggregate conversion process can be detected under specified conditions. The entropy and the standard free energy for the dimer formation in the case of 1 are found to be -16.12 eu and 7.46 k cal mol(-1), respectively. Addition of electrolytes (LiCl, NaCl, and KCl) and calf thymus DNA resulted in the enhancement of aggregate formation, whereas the monomer gets stabilized for several hours in the presence of microlieterogeneous media such as beta-cyclodextrin and cetyltrimethylammonium bromide. These results reveal that face-to-face stacking followed by hydrogen bonding interactions between the chromophoric units are the major driving force for the formation of sandwich (H-type) aggregates. These dyes exhibit favorable photophysical properties and can be applied into the tissues using carrier systems in which they do not form, aggregates and hence can have potential use as sensitizers, in photodynamic therapeutical applications.