Microbial rhodopsins were recently introduced as genetically encoded fluorescent indicators of membrane voltage. An understanding of the mechanism underlying this function would aid in the design of improved voltage indicators. We asked, what states can the protein adopt, and which states are fluorescent? How does membrane voltage affect the photostationary distribution of states? Here, we present a detailed spectroscopic characterization of Archaerhodopsin 3 (Arch). We performed fluorescence spectroscopy on Arch and its photogenerated intermediates in Escherichia coli and in single HEK293 cells under voltage-clamp conditions. These experiments probed the effects of time-dependent illumination and membrane voltage on absorption, fluorescence, membrane current, and membrane capacitance. The fluorescence of Arch arises through a sequential three-photon process. Membrane voltage modulates protonation of the Schiff base in a 13-cis photocycle intermediate (M ⇌ N equilibrium), not in the ground state as previously hypothesized. We present experimental protocols for optimized voltage imaging with Arch, and we discuss strategies for engineering improved rhodopsin-based voltage indicators.