We have investigated the effects of explicit molecular interactions and the membrane dipole potential on the absorption and emission spectra of a widely used fluorescent probe, di-8-ANEPPS, in a dipalmitoylphosphatidylcholine (DPPC) and a mixed DPPC/cholesterol membrane bilayer. Ground-state and excited-state geometries were calculated with the complete active space self-consistent field (CASSCF) method. Interactions with up to 260 atoms of the membrane bilayer were explicitly incorporated using a decoupled quantum mechanics/molecular mechanics (QM/MM) approach, utilizing recent advances in time-dependent density functional theory (TDDFT). We find that no specific molecular interactions affect the fluorescence of di-8-ANEPPS; rather, the magnitude of the membrane dipole potential is key to the shifts observed in both of the two lowest excited states.