The mechanism of response of two potential-sensitive dyes, diOC(2)(5) (3,3'-diethyloxadicarbocyanine iodide) and oxonol V (bis-[3-phenyl-5-oxoisoxazol-4-yl]pentamethine oxonol), were studied by using steady-state and time-resolved fluorescence techniques. The lipid concentration dependence of the Deltapsi (membrane potential)-induced change in total fluorescence intensity was quite different for these two dyes. Time-resolved fluorescence measurements showed that the fluorescence decay of these dyes in membranes could be resolved into at least three exponentials. Deltapsi-induced changes in the levels of these three populations were also measured under a variety of conditions. In the case of diOC(2)(5) an inside negative Deltapsi increased the levels of the bound forms. This shows that diOC(2)(5) responds to Deltapsi mainly by an "on-off" mechanism whereby Deltapsi perturbs the membrane-water partition coefficient of the dye. The Deltapsi-induced changes approached zero when the dye was totally membrane bound. In contrast, the Deltapsi-induced response of oxonol V increased with increased membrane binding. An inside negative Deltapsi decreased the level of the bound form with a longer lifetime. This shows that the mechanism of response of oxonol V is a Deltapsi-induced shift in the equilibrium between bound forms of the dye.