Wavelength-selective fluorescence comprises a set of approaches based on the red edge effect in fluorescence spectroscopy, which can be used to directly monitor the environment and dynamics around a fluorophore in a complex biological system. A shift in the wavelength of maximum fluorescence emission toward higher wavelengths, caused by a shift in the excitation wavelength toward the red edge of the absorption band, is termed the red edge excitation shift (REES). This effect is mostly observed with polar fluorophores in motionally restricted media such as very viscous solutions or condensed phases. We have previously shown that REES and related techniques (wavelength-selective fluorescence approach) offer a novel way to monitor organization and dynamics of membrane- and micelle-bound probes and peptides. In this paper, we report REES of NBDPE, a phospholipid whose headgroup is covalently labeled with the 7-nitrobenz-2-oxa-1,3-diazol-4-yl (NBD) moiety, when incorporated into reverse micelles formed by sodium bis(2-ethylhexyl) sulfosuccinate (AOT) in heptane with varying amounts of added water. Fluorescence parameters such as intensity, emission maximum, and REES of NBD-PE incorporated in AOT reverse micelles were found to be dependent on the [water]/ [surfactant] molar ratio (w(o)). Interestingly, the extent of REES was found to decrease with increasing wo. Time-resolved fluorescence measurements of NBD-PE in AOT/heptane -reverse micelles show a significant reduction in the mean fluorescence lifetime with increasing wo. In addition, fluorescence polarization and mean fluorescence lifetime of NBD-PE in reverse micellar environments were found to be wavelength-dependent. Taken together, these results are indicative of the motional restriction experienced by the fluorophore when bound to reverse micelles and its modulation with the [water]/[surfactant] molar ratio. Wavelength-selective fluorescence promises to be a powerful tool for exploring reverse micellar organization and dynamics under various conditions.