Infrared fluorescent proteins (iRFPs) are potential candidates for deep-tissue in vivo imaging. Here, we provide molecular-level insights into the role of the protein environment in the structural stability of the chromophore within the protein binding pocket through the flexible hydrogen-bonding network using molecular dynamics simulation. Furthermore, we present systematic excited-state analysis to characterize the nature of the first two excited states and the role of the environment in shaping the nature of the chromophore's excited states within the hybrid quantum mechanics/molecular mechanics framework. Our results reveal that the environment red-shifts the absorption of the chromophore by about 0.32 eV compared to the isolated counterpart, and besides the structural stability, the protein environment does not alter the nature of the excited state of the chromophore significantly. Our study contributes to the fundamental understanding of the excited-state processes of iRFPs in a complex environment and provides a design principle for developing iRFPs with desired spectral properties.