The modulation of the photophysical properties of 1'-hydroxy-2'-acetonaphthone (HAN) upon encapsulation into the hydrophobic nanocavities of different bile salt aggregates has been investigated for the first time using steady-state and time-resolved fluorescence spectroscopy. Because HAN is very sensitive to the polarity of the microenvironment in which it is confined, we performed a comparative study on the excited-state binding dynamics of HAN using three different bile salts of varying hydrophobicity. The encapsulation of HAN into the bile salt aggregates led to an enhanced fluorescence intensity along with a significant blue shift in the emission maxima that was highly sensitive to the confined microenvironment. Using HAN as a sensitive fluorophore to probe the nanocavities of bile salt aggregates in aqueous solution, we found different mechanisms of probe encapsulation depending on the degree of hydrophobicity of the nanocavities, which results in a difference in the alteration of the spectral behavior. A sharp increase in the fluorescence quantum yield near the cmc was observed, followed by saturation for all three bile salt aggregates. However, maximum fluorescence quantum yield in NaDC aggregates can be rationalized by maximum partitioning of HAN into the more hydrophobic and rigid environment provided by NaDC aggregates. Moreover, the alteration of the spectral behavior with increasing concentration of bile salts strikingly differs from that observed previously in the presence of conventional surfactants. Time-resolved fluorescence measurements further elucidated how the probe molecules interact with the aggregates. Longer fluorescence lifetime and anisotropy values clearly indicate the caging of the tautomers of HAN into the hydrophobic nanocavities of bile salt aggregates. This work further demonstrates the changes in the fluorescence properties of HAN with structural changes of bile salt aggregates induced by the addition of salt and organic cosolvent.