Absorption and emission spectra of free and encapsulated stilbene in two different capsules were calculated using the DFT and the TDDFT methodology at the B3LYP, CAM-B3LYP, M06-2X, PBEO, and omega B97X-D/6-31G(d,p) levels of theory. The present work is directed toward the theoretical interpretation of recent experimental results on control of stilbene conformation and fluorescence in capsules [Ams, M. R.; et al. Beilstein J. Org. Chem. 2009, 5, 79]. The results of the calculations are in agreement with experiment and show that fluorescence of trans-stilbene persists in the large cage while it is quenched in the small one. It is found that the geometry of trans-stilbene in the ground as well as in the first excited singlet state is unaffected by encapsulation in the large cage, and consequently the absorption and emission spectra are similarly unaffected. In the small cage, the ground state of encapsulated trans-stilbene is distorted, with the two phenyl groups twisted, while the geometry of the excited state, after relaxation, lies at the conical intersection with the ground state. Consequently, there is no emission similar to that of free trans-stilbene, and the state decays nonradiatively to the ground state.