2,2′-Bipyridine-3,3′-diol (BP(OH)2) has been used as a sensitive excited-state intramolecular proton transfer fluorophore to assess different bile salt aggregates as one of the potential biologically relevant host systems useful for carrying many sparingly water-soluble drug molecules. The formation of inclusion complexes, complex-induced fluorescence behavior, and their binding ability have been investigated from the modulated photophysics of BP(OH)2 by means of photophysical techniques. The constrained hydrophobic environment provided by the aggregates significantly reduces the water-assisted nonradiative decay channels and lengthens the fluorescence lifetime of the proton-transferred DK tautomer. Both the absorption and fluorescence properties of BP(OH)2 are found to be sensitive to the change in the structure, size, and hydrophobicity of the aggregates. Fluorescence quenching experiments were performed to gain insight into the differential distribution of the probe molecules between bulk aqueous phase and nanocavities of various aggregates. The observation of longer fluorescence lifetime and rotational relaxation time in NaDC aggregates compared to that in NaCh and NaTC aggregates indicates that the binding structures of NaDC aggregates are more rigid due to its greater hydrophobicity and larger size and therefore provide better protection to the bound guest. It is noteworthy to mention that the hydrophobic microenvironments provided by bile salt aggregates are much stronger than that provided by micelles and cyclodextrins. The accessibility of water to the aggregate-bound guest can significantly be enhanced with the addition of organic cosolvents. However, the efficiency decreases in the order of dimethylformamide, acetonitrile, and methanol.