Spectral characteristics of flutamide drug have been studied in various solvents and β-cyclodextrin (β-CD). The inclusion complex of flutamide with β-CD is analysed by UV-visible, fluorimetry, FT-IR, 1H NMR, SEM, DSC and AM1 methods. In all solvents, flutamide exhibits a dual fluorescence. The longer wavelength emission (A band ∼380 nm) is due to intramolecular charge transfer state (ICT) and the shorter wavelength emission (B band ∼285 nm) originates from a locally excited state. In β-CD, the increase in the fluorescence intensity of ‘A’ band indicates ICT emission enhanced in the β-CD medium. β-CD studies shows isopropyl group is present in the interior part of the β-CD cavity whereas amino and CF3 groups are present in the outside of the β-CD cavity. A mechanism is proposed to explain the 1:1 inclusion process.