The fluorescent dye Merocyanine 540 (MC540) is often used as a probe to monitor the molecular packing of phospholipids in the outer leaflet of biomembranes. In a previous study we showed that the increased staining of erythrocytes with a perturbed membrane structure was mainly due to an increase in the fluorescence yield of cell-bound MC540, rather than to an increase of the number of bound molecules. Erythrocytes and ghosts exposed to continuous fluxes of H2O2 exhibited pronounced lipid peroxidation. Further, red blood cells subjected to this form of oxidative stress also showed increased staining with MC540. It appeared that this was caused by a strong increase in binding of MC540, together with a slight red shift of the fluorescence emission maximum and a small increase in the fluorescence yield of bound MC540. The changed MC540 binding characteristics were not observed when lipid peroxidation was suppressed by the presence of the antioxidant BHT in the incubation medium. However, open ghosts exposed to H2O2 showed no increase of MC540 binding, excluding a direct involvement of lipid peroxidation. Measurement of fluorescence emission spectra and gel filtration studies showed that MC540 can bind to H2O2-exposed hemoglobin. Experiments with erythrocytes lysed in hypotonic medium after exposure to H2O2 revealed that peroxidation of lipids with H2O2 induced a non-specific permeabilization of the plasma membrane to MC540, thereby allowing MC540 to bind to the oxidatively denatured, more hydrophobic hemoglobin. These results indicate that conclusions about packing of phospholipids in the outer leaflet of the membrane based on increased MC540-staining should be drawn with care.