In this work, a squaraine dye CS5 was characterized and evaluated for its potential in photodynamic therapy. The studies were performed in ethanol and also in a powdered biopolymer, in this case chitosan. Ground state absorption, absolute fluorescence quantum yields, fluorescence lifetimes, and transient absorption were determined in order to evaluate the advantage of adsorbing the dye onto a biopolymer. Several concentrations of the dye, adsorbed onto chitosan, were prepared in order to evaluate the concentration effect on the photophysical parameters under study. A remarkable increase in the fluorescence quantum yield and lifetimes was detected when compared with the dye in solution. Also, a very clear dependence of the fluorescence quantum yield on the concentration range was found. A lifetime distribution analysis of these systems fluorescence evidenced the entrapment of the dye onto the chitosan environment with a monoexponential decay which corresponds to the monomer emission in slightly different environments. The transient absorption spectrum was obtained without sensitization indicating the existence of a triplet state which takes special importance in the generation of phototoxic species namely singlet oxygen. The subcellular localization of a photosensitizer is critical for efficient photoinduced cell death, in this way, colocalization studies were performed within HeLa cell line (human cervical carcinoma) through confocal microscopy. Toxicity in the dark and phototoxicity of CS5 were also evaluated for the same cellular model.