We present a new QM/QM/MM-based model for calculating molecular properties and excited states of solute-solvent systems. We denote this new approach the polarizable density embedding (PDE) model, and it represents an extension of our previously developed polarizable embedding (PE) strategy. The PDE model is a focused computational approach in which a core region of the system studied is represented by a quantum-chemical method, whereas the environment is divided into two other regions: an inner and an outer region. Molecules belonging to the inner region are described by their exact densities, whereas molecules in the outer region are treated using a multipole expansion. In addition, all molecules in the environment are assigned distributed polarizabilities in order to account for induction effects. The joint effects of the inner and outer regions on the quantum-mechanical core part of the system is formulated using an embedding potential. The PDE model is illustrated for a set of dimers (interaction energy calculations) as well as for the calculation of electronic excitation energies, showing promising results.