Controlling the aggregation behavior of organic dyes is important for understanding and exploring supramolecular assembly utilizing the specific characteristics of aggregation. Regulating J-aggregation by electrostatic interactions between anionic polyelectrolytes and cationic dyes has gained growing interest. Here, we report the formation of J-aggregates of a water-soluble cationic squaraine dye, 4-(pyridinium-1-yl)butylbenzothiazolium squaraine (SQ), using poly(acrylic acid) sodium salt (PAA-Na) as a template. Electrostatic interactions between the PAA-Na polyelectrolyte and the cationic SQ dye enhanced J-aggregation; the absorbance of the resulting J-band with the polyelectrolyte template was much sharper than the absorbance of the J-aggregate formed using a high concentration of NaCl. Significantly, removal of the polyelectrolyte PPA-Na template by the introduction of calcium ions, which can form stronger ionic binding with carboxylate groups, dissociated J-aggregates, freeing the SQ molecules back to unaggregated or lower aggregate forms. To demonstrate the reversibility of the J-aggregate formation cycle, an in situ experiment was conducted that showed 60% reversibility of the second cycle. In addition, an enhancement by ca. 23 times per repeat unit of the two-photon absorption (2PA) cross section was observed at 920 nm for the polyelectrolyte template-SQ J-aggregate compared to unaggregated or lower aggregate SQ. These results suggest a prominent role of polyelectrolyte templated SQ J-aggregation in the enhancement of 2PA efficiency and provide a means of modulating supramolecular assembly.