The present study reveals the modulation of photophysical properties of curcumin, an important drug for numerous reasons, inside a micellar environment formed by a surfactant-like ionic liquid (IL-micelle) in aqueous solution. Higher stability of the drug inside IL-micelle in the absence and presence of a simple salt (sodium chloride) as well as considerably large partition coefficient (Kp = 8.59 × 103) to the micellar phase from water make this system a well behaved drug loading vehicle. Remarkable change in fluorescence intensity with a strong blue-shift implies the gradual perturbation of intramolecular hydrogen bond (H-bond) present within the keto-enol group of curcumin along with considerable formation of intermolecular H-bond between curcumin and the headgroup of surfactant-like IL. Very fast nonradiative decay channels in curcumin mainly caused by the excited state intramolecular proton transfer (ESIPT) are thus depleted remarkably in the presence of IL-micelle of reduced polarity and as a result of restricted rotational and vibrational degrees of freedom when bound to the micelle. Moreover, time-resolved results confirm that not only the keto-enol group of curcumin is playing here but also the phenolic hydroxyl groups are also responsible for such modulation in photophysical properties. From a thermodynamic point of view, our system shows good correlation with its stability parameters (higher binding constant with very less hydrolytic degradation rate ∼1%) and higher negative value of binding enthalpy of interaction (-ΔH) than total free energy change (-ΔG) implies that the nature of binding interaction is enthalpy driven not entropy alone. Summarizing all the above observations, we have concluded that the modulation of the intramolecular proton transfer is due to the presence of both intermolecular proton transfer as well as strong hydrophobic interaction between curcumin and the IL-micelle. © 2012 American Chemical Society.