Excited-state intramolecular proton transfer (ESIPT) and dual luminescence behaviour of 3-hydroxyflavone (3-HF) have been utilized to monitor its binding to liposomal membranes prepared from egg yolk phosphatydilcholine (EYPC). Additionally, absorption spectrophotometric assay has been performed to evaluate the antioxidant activity of 3-HF against lipid peroxidation in this membrane system. When 3-HF molecules are partitioned into EYPC liposomes, a weak long-wavelength absorption band with lambda(abs)(max) approximately 410 nm appears in addition to the principal absorption at approximately lambda(abs)(max) = 345 nm. Selective excitation of the 410 nm band produces the characteristic emission (lambda(em)(max) approximately 460 nm) of the ground-state anionic species, whereas excitation at the higher energy absorption band leads to dual emission with predominatly ESIPT tautomer fluorescence (lambda(em)(max) = 528 nm). Both ESIPT tautomer and the anionic species exhibit fairly high fluorescence anisotropy (r) values (r = 0.122 and 0.180, respectively). Biexponential fluorescence decay kinetics are observed for the ESIPT tautomer as well as the ground-state anionic forms, indicating heterogeneity in the microenvironments of the corresponding emitting species. Furthermore, we demonstrate that lipid peroxidation of EYPC liposomes is significantly inhibited upon 3-HF binding, suggesting that 3-HF can be potentially useful as an inhibitor of peroxidative damage of cell membranes.