The modulation of the photophysical properties of curcumin inside two different types of microenvironments provided by nonionic surfactant forming micelles and vesicles (niosomes) has been investigated using steady state and time-resolved fluorescence spectroscopy. The formation of small unilamellar Tween-20/cholesterol niosomes with narrow size distribution has been successfully demonstrated by means of dynamic light scattering (DLS) and transmission electron microscopy (TEM) techniques. Our results indicate that niosomes are a better possible delivery system than the conventional surfactants forming normal micelles to suppress the level of degradation of curcumin. The enhanced fluorescence intensity along with the significant blue-shift in the emission maxima of curcumin upon encapsulation into the hydrophobic microenvironments of micelles and niosomes is a consequence of the reduced interaction of curcumin with the water molecules. We found that the more rigid and confined microenvironment of niosomes enhances the steady state fluorescence intensity along with the fluorescence lifetime of curcumin more than in micelles. The rigidity of the niosome membrane which arises basically due to the presence of cholesterol molecules increases the level of interaction between curcumin and the oxoethylene units of Tween-20 molecules. It is also possible for the hydroxyl groups of the cholesterol moieties to form intermolecular hydrogen bonds with curcumin to perturb nonradiative deactivation mechanism through excited state intramolecular hydrogen atom transfer (ESIHT).