The interaction between beta-cyclodextrin (β-CD) and the merocyanine form of 4-[(2E)-1,1-dimethyl-2-({[(1Z)-2-oxo-1,2-dihydronaphthalen-1-ylidene]amino}methylidene)-1H,2H,3H-benzo[e]indol-3-yl]butane-1-sulfonic acid (MC) was investigated to elucidate host–guest complexation dynamics and stability, in order to develop applications such as photoswitches for imaging and therapy. These applications are possible due to MC’s absorption changes upon isomerization; therefore, the β-CD environment can provide a consistent, water-compatible platform and potentially targetable coatings. β-CD is a cyclic oligosaccharide that is well known for its ability to form "inclusion complexes" with other molecules, changing the properties of the guest molecule upon binding. Spironaphthoxazines belong to the class of organic photochromic compounds. In this work, MC’s Open Photomerocyanine form was used in the investigations and complex formation. Aqueous solutions of MC in the presence and absence of β-CD were irradiated at the corresponding wavelength, and their spectroscopic behavior was analyzed. Binding constants were calculated, and the continuous variation method (Job’s plot) demonstrated that stoichiometries other than 1:1 were present. Not only were 2:1 and 3:1 complexes observed, but many other possible intermediate stoichiometries (e.g., between 1:1 and 3:1) may also be present in the solution. Dynamic light scattering measurements were used to characterize the β-CD/MC nanoparticles. The thermal behavior of the complexes was investigated using solution calorimetry. Docking studies combined with DFT calculations were done to evaluate the stability of β-CD/MC complexes with different stoichiometries. Interestingly, the 2:1 complex shows a slightly higher stability compared to the 1:1 and 3:1 complexes, aligning well with experimental findings. The results have shown that the inclusion of MC within the β-CD cavity influences the rate and direction of isomerization between different MC forms, also affecting MC solubility and stability. The interaction between MC and β-CD can be used for further applications to create controlled optical switches that respond to external stimuli like light, temperature, or pH.