Photophysical properties of l-Docosyl-4-(4-hydroxystyryl)pyridiniurn bromide (SB), a merocyanine dye in solution and encapsulated in sol-gel derived glass are investigated at 298 and 77 K. In solution, the absorption spectra of SB display an equilibrium between the quinolinium and benzoid forms. The equilibrium can be shifted to either quinolinium or benzoid form under an acidic or basic condition, respectively. The emission spectra of SB, on the other hand, give not only the quinolinium and benzoid forms but also the quinoid form which emits at 500 nm. The existence of excited state quinoid form of SB is also evident in the excitation spectrum while the emission at 500 nm is monitored. Both in solution and in xerogel, the quinoid form of SB is shown to be photochemically unstable as compared to the benzoid form. It is proposed that the photoexcited quinolinium form of SB is a proton dissociative species which transforms readily to become the quinoid form. The results indicate that photochemistry channels of SB are originated from the quinoid form. Moreover, the benzoid form of SB (photochemically stable) exhibits large hyperpolarizability due to its charge-transfer characteristic, and is a desired molecular form for nonlinear optical (NLO) applications. The material processing techniques for stabilizing the benzoid form of SB in optically transparent sol-gel glasses are illustrated for the first time.